Financial Cycles and Monetary Policy

Elena Seghezza
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Elena Seghezza: Department of Political Science, University of Genoa, Italy

Economia Internazionale / International Economics, 2026, vol. 79, issue 1, 27-36

Abstract: Before the Global Financial Crisis, in both the dominant view and the econometric models used by central banks, finance was considered as being peripheral to the macroeconomic cycle. Borio and other scholars working at the Bank for International Settlements (BIS) made a major contribution to the theory of financial crises by highlighting how a financial cycle can impact on real variables. In particular, when a financial cycle overlaps with an expansive real cycle, banks may underestimate credit risk leading to a real estate and/or financial bubble that in the end may result in a financial crisis. The importance given by Borio to the financial cycle led him to suggest that monetary policy should support macroprudential policies aimed at ensuring financial stability.

Cicli finanziari e politica monetaria

Prima della crisi finanziaria globale, nella visione dominante e nei modelli econometrici delle banche centrali, la finanza era considerata periferica rispetto al ciclo macroeconomico. Borio e altri studiosi della Banca dei Regolamenti Internazionali (BRI) hanno dato un contributo importante alla teoria delle crisi finanziarie, evidenziando come un ciclo finanziario possa avere un impatto sulle variabili reali. In particolare, quando un ciclo finanziario si sovrappone ad un ciclo reale espansivo, le banche possono sottostimare il rischio di credito, dando origine ad una bolla immobiliare e/o finanziaria, che, a sua volta, può sfociare in una crisi finanziaria. Data l’importanza attribuita al ciclo finanziario, Borio auspica che la politica monetaria sia di supporto alle politiche macroprudenziali volte a garantire la stabilità finanziaria.

Keywords: Financial Cycles; Global Financial Crisis; Monetary Policy (search for similar items in EconPapers)
JEL-codes: E30 E44 E50 G20 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ris:ecoint:022209

DOI: 10.65644/EIIE.079.01.0027

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