The Interaction of Monetary and Macroprudential Policies
Policy Papers, December 29, 2012
Source details
- Canonical URL
- The Interaction of Monetary and Macroprudential Policies
Other formats
Bibliographic details
- Published: December 29, 2012
- Series: Policy Papers
Summary
- Publication date: December 29, 2012
- Core observation: The recent crisis showed that price stability does not guarantee macroeconomic stability.
- Problem identified: In several countries, dangerous financial imbalances developed under low inflation and small output gaps.
- Proposed change in policy stance: To ensure macroeconomic stability, policy has to include financial stability as an additional objective.
Key findings
- Monetary policy alone is not well suited to target specific sources of financial imbalances.
- Macroprudential tools can target specific sources of financial imbalances and include a range of constraints on leverage and the composition of balance sheets.
- Effective macroprudential policies could:
- Contain risks ex ante.
- Help build buffers to absorb shocks ex post.
Policy implications and recommendations
- Adopt financial stability as an explicit additional policy objective alongside price stability.
- Develop and deploy macroprudential tools that:
- Target specific sources of financial imbalances.
- Constrain leverage.
- Influence the composition of balance sheets.
- Use macroprudential policy to complement monetary policy rather than substitute for it, given differences in targeting and instruments.
Metadata and publication notes
- Format: Web landing page with PDF download available.
- Citation preview on page: The Interaction of Monetary and Macroprudential Policies , (USA: International Monetary Fund, 0) accessed 9/16/2026
The Interaction of Monetary and Macroprudential Policies — December 29, 2012; The Interaction of Monetary and Macroprudential Policies , (USA: International Monetary Fund, 0) accessed 9/16/2026
Content in this bundle
- The Interaction of Monetary and Macroprudential Policies; IMF Policy Papers; January 29, 2013