Coordination Incentives in Cross-Border Macroprudential Regulation

Alexis Derviz () and Jakub Seidler

No 2012/21, Working Papers IES from Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies

Abstract: We discuss (dis)incentives for fair cooperation related to delegating macroprudential policy decisions to a supranational body, as well as their welfare implications. The question is studied by means of a signaling game of imperfect information between two national regulators. The model concentrates on informational frictions in an environment with otherwise fully aligned preferences. We show that even in the absence of evident conflicting goals, the non-transferrable nature of some regulatory information creates misreporting incentives. However, the major problem is not the reporting accuracy but the institutional arrangement focused on maximal multilateral satisfaction to the detriment of credible enforcement of rules. The main application is meant to be systemic risk management by the relevant EU institutions.

Keywords: macroprudential regulation; integration; autonomy; information; reporting (search for similar items in EconPapers)
JEL-codes: C72 D02 D83 F55 H77 (search for similar items in EconPapers)
Pages: 26pages
Date: 2012-07, Revised 2012-07
New Economics Papers: this item is included in nep-ban, nep-cta, nep-iue and nep-rmg
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Citations: View citations in EconPapers (1)

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Working Paper: Coordination Incentives in Cross-Border Macroprudential Regulation (2012)
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