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Macroprudential supervision: from theory to policy
External Authors
Schoenmaker, D
Wierts, P
Related Themes
Macro-Economic Dynamics and PolicyJEL Code
E58, G18, G28
Journal
National Institute Economic Review
Publisher
Sage Publications, London
External Resources
Issue
235
Financial supervision focuses on the aggregate (macroprudential) in addition to the individual (microprudential). But an agreed framework for measuring and addressing financial imbalances is lacking. We propose a holistic approach for the financial system as a whole, beyond banking. Building on our model of financial amplification, the financial cycle is the key variable for measuring financial imbalances. The cycle can be curbed by leverage restrictions that might vary across countries. We make concrete policy proposals for the design of macroprudential instruments to simplify the current framework and make it more consistent.
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