Adapting Macroprudential Policies to Global Liquidity Conditions

Hyun Song Shin

Journal Economía Chilena (The Chilean Economy), 2012, vol. 15, issue 2, 33-65

Abstract: This paper outlines an approach to macroprudential policy for open emerging economies that emphasizes banking sector balance sheet management as the key driver of risk premiums, capital flows and vulnerabilities to sudden reversals in global liquidity conditions. It argues for the usefulness of monitoring the "non-core liabilities" of the banking sector as a signal of lending standards and potential vulnerability of the financial system to shocks. The paper presents a taxonomy of macroprudential tools, ranging from orthodox tools of bank capital regulation to more novel "liabilities-side" tools, such as the levy on non-core liabilities recently introduced by the Korean Republic.

Date: 2012
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Related works:
Chapter: Adapting Macroprudential Policies to Global Liquidity Conditions (2014)
Working Paper: Adapting Macropudential Policies to Global Liquidity Conditions (2012)
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