March 21, 2018

Macroprudential Policy and Regulation

The financial crisis has signalized the need to reconsider the former micro approach to regulation and supervision of financial institutions. While in the past there was much debate on the scope of micro-prudential supervision on individual banks, there was little debate on macro-prudential supervision to secure the financial system. To achieve this goal an interplay of microprudential and macroprudential authority is needed to identify systemic risks as a key factor of financial stability and verify financial regulation from a systemic risk perspective.
The macroprudential approach focuses on risks arising in foreign financial markets and the impact of financial distress on important financial institutions. The key aspects of current regulatory reforms include measuring and regulating systemic risk, as well as designing macroprudential policies as a tool to manage possible future systemic risk. Currently is questioned how to design an effective macroprudential regulatory framework that achieves the financial stability objective corresponding to microprudential and monetary policy.

Published papers

Agénor, P.-R., and L.A. Pereira da Silva (2014). Macroprudential regulation and the monetary transmission mechanism. Journal of Financial Stability 13: 44-63.

Aikman, D., B. Nelson, and M. Tanaka (2015). Reputation, risk-taking, and macroprudential policy. Journal of Banking & Finance 50: 428-439.

Aiyar, S., C.W. Calomiris, and T. Wieladek (2014). Does macro-prudential regulation leak? Evidence from a UK policy experiment. Journal of Money, Credit and Banking 46(1): 181-214.

Akinci, O., J. Olmstead-Rumsey (2018). How effective are macroprudential policies? An empirical investigation. Journal of Financial Intermediation, (33): 33-57.

Alexander, G., A. Baptista, and S. Yan (2017). Bank Regulation and International Financial Stability: A Case Against the 2006 Basel Framework for Controlling Tail Risk in Trading Books. Journal of International Money and Finance (43): 107-130.

Alpanda, S., and S. Zubairy (2016). Addressing household indebtedness: Monetary, fiscal or macroprudential policy? European Economic Review 92 : 47-73.

Altunbas, Y., M. Binci, and L. Gambacorta (2018). Macroprudential policy and bank risk. Journal of International Money and Finance (81): 203-220.

Arnold, B., C. Borio, L. Ellis, and F. Moshirian (2012). Systemic risk, macroprudential policy frameworks, monitoring financial systems and the evolution of capital adequacy. Journal of Banking & Finance 36(12): 3125–3132.

Bailliu, J., C. Meh, and Y. Zhang (2015). Macroprudential rules and monetary policy when financial frictions matter. Economic Modelling 50: 148-161.

Benigno, G., H. Chen, C. Otrok , A. Rebucci and E. R. Young (2013). Financial crises and macro-prudential policies. Journal of International Economics 89(2): 453-470.

Borio, C. (2003). Towards a macroprudential framework for financial supervision and regulation? CESifo Econ Stud 49 (2): 181-215.

Bruno,V., I. Shim, and H. Song Shin (2017). Comparative assessment of macroprudential policies. Journal of Financial Stability 28: 183-202.

Brzoza-Brzezina, M., M. Kolasa, and K. Makarski (2015). Macroprudential policy and imbalances in the euro area. Journal of International Money and Finance 51: 137-154.

Cerutti, E., S. Claessens, and L. Laeven (2016). The use and effectiveness of macroprudential policies: New evidence. Journal of Financial Stability (Forthcoming)

Cerutti, E.M., R. Correa, E. Fiorentino and E. Segalla (2017). Changes in Prudential Policy Instruments – A New Cross-Country Database. International Journal of Central Banking (13): 477-503.

Claessens, S., S.R. Ghosh, and R. Mihet (2013). Macro-prudential policies to mitigate financial system vulnerabilities. Journal of International Money and Finance 39: 153-185.

Claeys, S., and K. Schoors (2007). Bank supervision Russian style: Evidence of conflicts between micro- and macro-prudential concerns. Journal of Comparative Economics 35(3): 630-657.

Drehmann, M., and L. Gambacorta (2012). The effects of countercyclical capital buffers on bank lending. Applied Economics Letters 19(7): 603-608.

Farhi, E., and I. Werning (2016). A Theory of Macroprudential Policies in the Presence of Nominal Rigidities. Econometrica 84: 1645-1704.

Farooq Akram, A. (2014). Macro effects of capital requirements and macroprudential policy. Economic Modelling 42: 77-93.

Galati, G., and R. Moessner (2013). Macroprudential policy- a literature review. Journal of Economic Surveys 27(5): 846-878.

Galati, G., and R. Moessner(2017). What Do We Know About the Effects of Macroprudential Policy? Economica.

Gersbach, H., and J. Rochet (2017). Capital Regulation and Credit Fluctuations. Journal of Monetary Economics.

Guerrieri, L., M. Iacoviello, F. Covas, J.C. Driscoll, M. Jahan-Parvar, M. Kiley, A. Queralto, and J. Sim (2019). Macroeconomic Effects of Banking-Sector Losses across Structural Models. International Journal of Central Banking 15(3): 137-204.

Hanson, S.G., A.K. Kashyap, and J.C. Stein (2011). A macroprudential approach to financial regulation. Journal of Economic Perspectives 25(1): 3-28.

De Haan, J., A. Houben, and R. van der Molen (2012). Governance of macroprudential policy. Journal of Public Law 67(2): 283-302.

Hartmann, P. (2015). Real estate markets and macroprudential policy in Europe. Journal of Money, Credit and Banking 47(1): 69-80.

Di Iasio, G. (2013). Incentives and financial crises: microfounded macroprudential regulation. Journal of Financial Intermediation 22(4): 627-638.

Jiménez, G., S. Ongena, and J.-L. Peydró (2017). Macroprudential policy, countercyclical bank capital buffers and credit supply: Evidence from the Spanish dynamic provisioning experiments. Journal of Political Economy 125(6): 2126-2177.

Korinek, A., and D. Sandri (2016). Capital controls or macroprudential regulation? Journal of International Economics 99: 27-42.

Kuttner, K., and I. Shim (2016). Can non-interest rate policies stabilize housing markets? Evidence from a panel of 57 economies . Journal of Financial Stability 26: 31-44.

Lombardi, D., and M. Moschella (2017). The symbolic politics of delegation: macroprudential policy and independent regulatory authorities. New Political Economy 22: 92-108.

Lombardi, D., and P. L. Siklos (2016). Benchmarking macroprudential policies: An initial assessment. Journal of Financial Stability 27: 35-49.

Meeks, R. (2017). Capital regulation and the macroeconomy: Empirical evidence and macroprudential policy. European Economic Review 95: 125-141.

De Nicoló, G., G. Favara, and L. Ratnovski (2014). Externalities and Macroprudential Policy. Journal of Financial Perspectives 2(1).

De Paoli, Bianca and Paustian (2017). Coordinating Monetary and Macroprudential Policies. Journal of Money, Credit and Banking 49: 319-349.

Rubio, M., and J.A. Carrasco-Gallego (2014). Macroprudential and monetary policies: Implications for financial stability and welfare. Journal of Banking & Finance 49: 326-336.

Rubio, M. and J. Carrasco-Gallego (2016). The new financial regulation in Basel III and monetary policy: A macroprudential approach. Journal of Financial Stability 26: 294-305.

Schoenmaker, D., and P. Wierts (2016). Macroprudential Supervision: From Theory to Policy. National Institute Economic Review 235(1): 50-62.

Schwaab, B., S.J. Koopman and A. Lucas (2017). Global Credit Risk: World, Country and Industry Factors. Journal of Applied Econometrics 32(2): 296-317.

Takáts, E., and J. Temesvary (2019). Can macroprudential measures make cross-border lending more resilient? Lessons from the Taper Tantrum. International Journal of Central Banking 15(1): 61-105.

Tayler. W.J., and R. Zilberman (2016). Macroprudential regulation, credit spreads and the role of monetary policy. Journal of Financial Stability 26: 144-158.

Tillmann, P. (2015). Estimating the effects of macroprudential policy shocks: A qual VAR approach. Economics Letters 135: 1-4.

Ueda, K., and F. Valencia (2014). Central bank independence and macro-prudential regulation. Economics Letters 125(2): 327-330.

Vandenbussche, J., U. Vogel, and E. Detragiache(2015). Macroprudential policies and housing prices: A new database and empirical evidence for Central, Eastern, and Southeastern Europe. Journal of Money, Credit and Banking 47(1): 343-377.

Special Issues

Special Issue of the International Journal of Central Banking on International Prudential Policy Spillovers: Volume 13, Supplement 1, March 2017.

Working and discussion papers

Acharya, V. , K. Bergant, M. Crosignani, T. Eisert, and F. J. McCann (2020). The Anatomy of the Transmission of Macroprudential Policies. NBER Working Paper No. 27292.

Agénor, P.-R., L. Gambocorta, E. Kharroubi, G. Lombardo, and A. Luiz (2017). The International Dimensions of Macroprudential Policies. CEPR Discussion Paper No. 12108.

Agénor, P.-R., L. Gambocorta, E. Kharroubi, L. A. Pereira da Silva (2018). The effects of prudential regulation, financial development and financial openness on economic growth. BIS Working Papers No. 752.

Ahnert, T., K. Forbes, C. Friedrich, and D. Reinhardt (2018). Macroprudential FX Regulations: Shifting the Snowbanks of FX Vulnerability? CEPR Discussion paper No. DP12766.

Alam, Z., A. Alter, J. Eiseman, G. Gelos, H. Kang, M. Narita, E. Nier, and N. Wang (2019). Digging Deeper–Evidence on the Effects of Macroprudential Policies from a New Database. IMF Working Papers No. 19/66.

Ampudia, M., and S. Van den Heuvel (2018).  Monetary policy and bank equity values in a time of low interest rates. ECB Working Paper No. 2199.

Aizenmann, J., M. D. Chinn, and H. Ito (2017). Financial Spillovers and Macroprudential Policies. NBER Working Paper No. 24105.

Arce, F., J. Bengui, J. Bianchi (2019). A Macroprudential Theory of Foreign Reserve Accumulation. NBER Working Paper No. 26236.

Arregui,N., J. Benes, I. Krznar, S. Mitra, and A.O. Santos (2013). Evaluating the net benefits of macroprudential policy: A cookbook. IMF Working Paper 13/167.

Ayyagari, M., T. Beck, and M. Soledad Martinez Peria (2018). The Micro Impact of Macroprudential Policies: Firm-Level Evidence. IMF Working Paper No. 18/267.

Baba, C. , S. Dell’Erba, E. Detragiache, O. Harrison, A. Mineshima, A. Musayev, and A. Shahmoradi (2020). How Should Credit Gaps Be Measured? An Application to European Countries. IMF Working Paper 20/6

Bank for International Settlements (2012). Operationalising the selection and application of macroprudential instruments. CGFS Papers No 48.

Basten, C., and C. Koch (2015). Higher bank capital requirements and mortgage pricing: Evidence from the countercyclical capital buffer (CCB). BIS Working Papers No 511.

Bengui, J., J. Bianchi (2019). Macroprudential Policy with Leakages. CEPR Discussion Papers No. 13951.

Bennani, T., M. Després, M. Dujardin, T. Duprey, and A. Kelber (2014). Macroprudential framework: key questions applied to the French case. Banque de France Occasional Papers No. 9.

Bhattacharya, R., P. Jeasakul, H. Kang, S. Munoz, F. Vitek, N. Wang, and R. Zandvakil (2017). Macroprudential Policy Spillovers: A Quantitative Analysis. IMF Working Paper No. 17/170.

Blanchard,O., G. Dell’Ariccia, P. Mauro, and an IMF Staff Team (2013). Rethinking macro policy II: Getting granular. IMF Staff Discussion 13/03.

Beirne, J., and C. Friedrich (2014). Capital flows and macroprudential policies – A multilateral assessment of effectiveness and externalities. Bank of Canada Working Paper 2014-31.

Buch, C., and L. Goldberg (2016). Cross-Border Prudential Policy Spillovers: How Much? How Important? Evidence from the International Banking Research Network. NBER Working Paper No. 22874.

Cantú, C., L. Gambacorta, and I. Shim (2020). Measuring the effectiveness of macroprudential policies using supervisory bank-level data. BIS Working Paper No. 110.

Cerutti, E.M., and H. Zhou (2018). Cross-border Banking and the Circumvention of Macroprudential and Capital Control Measures. IMF Working Paper No. 18/217.

Claessens, S. (2014). An overview of macroprudential policy tools. IMF Working Paper 14/214.

Danisewicz, P., D. Reinhardt and R. Sowerbutts (2015). On a tight leash: does bank organisational structure matter for macroprudential spillovers? Bank of England Working Paper No. 524.

Darracq Pariès, M., C. Kok, E. Rancoita (2019). Macroprudential policy in a monetary union with cross-border banking. ECB Working Paper No. 2260.

Drechsler, I., A. Savov, P. Schnabl (2019). How Monetary Policy Shaped the Housing Boom. CEPR Discussion Paper No. DP14252.

Dutra Araujo, J., M. Patnam, A. Popescu, F. Valencia, and W. Yao (2020). Effects of Macroprudential Policy: Evidence from Over 6,000 Estimates. IMF Working Paper 20/67.

Engel, C. (2015). Macroprudential policy in a world of high capital mobility: Policy implications from an academic perspective. NBER Working Paper No. 20951.

Epure, M., I. Mihai, C. Minoiu and J. Peydro (2017). Household Credit, Global Financial Cycle, and Macroprudential Policies: Credit Register Evidence from an Emerging Country. Available at SSRN: or

Faia, E., and S. Karau (2019). Banks’ Systemic Risk and Monetary Policy. CEPR Discussion Papers No. 13456.

Franch, F., L. Nocciola, D. Żochowski (2019). Cross-border effects of prudential regulation: evidence from the euro area. ECB Working Paper Series No. 2285.

Galati, G., and R. Moessner (2014). What do we know about the effects of macroprudential policy?. DNB Working Paper No. 440.

Gambacorta, L., and A. Pabón (2017). The impact of macroprudential policies and their interaction with monetary policy: an empirical analysis using credit registry data. BIS Working Paper No 636.

Gandré, P., M. Mariathasan, O. Merrouche, and S. Ongena (2020). Unintended Consequences of the Global Derivatives Market Reform. CEPR Working Paper No. 14802.

Genberg, H., and M. Zamorski (2015). Implementing macroprudential policies: Challanges, pitfalls and way forward. SAECEN Working Paper 9/2015.

Haldane, A., M. Roberts-Sklar, T. Wieladek, and C. Young (2016). QE: the story so far. CEPR Working Paper 11691.

Huizinga, H.,  L. Laeven (2019). The procyclicality of banking:
evidence from the euro area. ECB Working Paper No. 2288.

Ilzetzki, E., K. Rogoff, and C. M. Reinhart (2020). Why is the Euro Punching Below its Weight. CEPR Discussion Papers No. 14315.

Jeanne, O. (2014). Macroprudential policies in a global perspective. NBER Working Paper No. 19967.

Kalemli-Ozcan, S. (2019). US Monetary Policy and International Risk Spillovers. CEPR Discussion Papers No. 14053.

Koch, C., G. Richardson, and P. Van Horn (2020). Countercyclical Capital Buffers: A Cautionary Tale. NBER Working Paper No. 26710.

Lagos, R., S. Zhang (2019). The Limits of Monetary Economics: On Money as a Medium of Exchange in Near-Cashless Credit Economies. CEPR Discussion Papers No. 14057.

Lim, C., F. Columba, A. Costa, P. Kongsamut, A. Otani, M. Saiyid, T. Wezel, and X. Wu (2011). Macroprudential policy: What instruments and how to use them? Lessons from country experiences. IMF Working Paper 11/238.

Maddaloni, A., A. Scopelliti (2019). Rules and discretion(s) in prudential regulation and supervision: evidence from EU banks in the run-up to the crisis. ECB Working Paper No. 2284.

Mendoza, E. (2016). Macroprudential Policy: Promise and Challenges. NBER Working Paper No. 22868.

Müller K. (2019). Electoral Cycles in Macroprudential Regulation.  Working Paper, Princeton University.

Osinski,J., K. Seal, L. Hoogduin, and an IMF Staff Team (2013). Macroprudential and microprudential Policies: Toward cohabitation. IMF Staff Discussion Note 13/05.

Pedrono, J. (2017). International integration, currency diversification and banking stability. Aix-Marseille School of Economics Working Paper.

Richter, B., M. Schularick, and I. Shim (2018). The Costs of Macroprudential Policy. NBER Working Paper No. 24989.

Segura A., and J. Suarez (2019). Optimally Solving Banks’ Legacy Problems. CEPR Discussion Paper No. DP13718.

Schoenmaker, D. (2012). The missing link in banking union: Macro-Prudential supervision. DSF Policy Briefs.

Schularick, M., L. Ter Steege, and F. Ward (2020). Leaning against the wind and crisis risk. CEPR Working Paper No. 14797.

Takáts, E., and J. Temesvary (2019). How does the interaction of macroprudential and monetary policies affect cross-border bank lending? BIS Working Paper No. 782.

Other articles

Angelini, P., S. Nicoletti-Altimari, and I. Visco (2012). Macroprudential, microprudential and monetary policies: conflicts, complementarities and trade-offs. Banca D’Italia Occasional Papers 140.

Bank of England (2011). Instruments of macroprudential policy: A discussion paper.

Banque de France (2014). Macroprudential policies: implementation and interactions. Financial Stability Review No. 18.

Bruno, V., I. Shim and H. S. Shin (2015). Effectiveness of macroprudential and capital flow measures in Asia and the Pacific. BIS Papers No 82.

Claessens, S., and F. Valencia (2013). The interaction between monetary and macroprudential policies.

Constâncio, V. (2016). The new ECB Macroprudential Bulletin.

Danisewicz, P., D. Reinhardt, and R. Sowerbutts (2015). Macroprudential spillovers: The role of organisational structure.

Frait, J., S. Malovaná and V. Tomsík (2015). The interaction of monetary and macroprudential policies in the pursuit of the central bank’s primary objectives. Czech National Bank Financial Stability Report 2014/2015 pp. 110-120.

Houben, A., R. Nijskens, and M. Teunissen (2012). Putting Macroprudential Policy to Work. De Nederlandsche Bank Occasional Studies Vol. 12-7.

IMF-FSB-BIS (2016). Elements of effective macroprudential policies – lessons from international experience.

International Monetary Fund (2010). Regional economic outlook : Western Hemisphere : heating up in the south, cooler in the north. World economic and financial Surveys 0258-7440.

International Monetary Fund (2013). The interaction of monetary and macroprudential Policies. IMF Policy Paper.

International Monetary Fund (2011). Toward operationalizing macroprudential policies: When to act? Global Financial Stability Report 2011.

Lopez,C., D. Markwardt, and K. Savard (2015). Macroprudential policy. Silver bullet or refighting the last war? Milken Insitute Research.

Schoenmaker, D. (2014). Macroprudentialism.