Macroprudential Policy: What Instruments and How to Use them? Lessons From Country Experiences

October 1, 2011

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Format: Chicago

Macroprudential Policy: What Instruments and How to Use them? Lessons From Country Experiences, (USA: International Monetary Fund, 2011) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper provides the most comprehensive empirical study of the effectiveness of macroprudential instruments to date. Using data from 49 countries, the paper evaluates the effectiveness of macroprudential instruments in reducing systemic risk over time and across institutions and markets. The analysis suggests that many of the most frequently used instruments are effective in reducing pro-cyclicality and the effectiveness is sensitive to the type of shock facing the financial sector. Based on these findings, the paper identifies conditions under which macroprudential policy is most likely to be effective, as well as conditions under which it may have little impact.

Subject: Credit, Currencies, Exchange rate arrangements, Financial crises, Financial sector policy and analysis, Foreign exchange, Macroprudential policy, Money, Systemic risk

Keywords: Capital, Credit, Credit growth, Deposit ratio, Eastern Europe, Exchange rate, Exchange rate arrangements, Fiscal policy tool, Foreign currency, Growth decline, Instruments, Interconnectedness, Interest rate, Liquidity, Macroprudential, Macroprudential policy, Monetary policy, Price inflation, Procyclicality, Systemic risk, WP

Publication Details

Pages:

85
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2011/238
Stock No:

WPIEA2011238
ISBN:

9781463922603
ISSN:

1018-5941

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