Macroprudential Policy during COVID-19: The Role of Policy Space: A Discussion

Valentina Bruno

Chapter 9 in Macro-financial Stability Policy in a Globalised World: Lessons from International Experience:Selected Papers from the Asian Monetary Policy Forum 2021 Special Edition and MAS-BIS Conference, 2023, pp 175-182 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Macroprudential polices (or “macro-pru”) have become a popular tool to address systemic risk especially after the Global Financial Crisis (GFC). South Korea is one example of macro-pru being successfully in action. In June 2010, South Korea introduced a series of macroprudential measures aimed at moderating the procyclicality of the banking sector, especially cross-border banking sector liabilities (Bruno and Shin, 2014). In the chapter, Bergant and Forbes use the COVID-19 event as a natural experiment to examine how more than a decade of macro-pru policies have performed in the presence of an exogenous shock. Bergant and Forbes use a comprehensive dataset that combines three macro-pru tools (countercyclical capital buffer, loan-to-value-ratio and FX intervention), augmented with the most recent macro-pru adjustments. The study is a timely and very important work that highlights differences in macro-pru preparedness across countries…

Keywords: Macro-financial Policy; Policy Framework; Macroprudential Policy; Monetary Policy; Fiscal Policy; Capital Flow Management Measure; Capital Control; Foreign Exchange Intervention; Integrated Policies; Multiple Policies; Policy Trade-off; Policy Substitute; Policy Complement; Policy Interaction; Policy Space; Central Bank; International Spillovers; Spillbacks; Sending Country; Receiving Country; Financial Channel; Financial Regulation; Financial Stability; External Stability; Advanced Economy; Emerging Market Economy; Capital Flow; Portfolio Flow; Banking Flow; Exchange Rate; Banking System; Non-bank Financial Institution; United Kingdom; Sweden; China; Hong Kong Sar; India; Indonesia; Korea; Singapore; Latin America; Croatia (search for similar items in EconPapers)
JEL-codes: E E52 E58 E6 F F01 F3 F38 (search for similar items in EconPapers)
Date: 2023
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