Selected Issues Papers

Macroprudential Policy Calibration for Greece: Simulations for Borrower-Based Measures

By Marco Gross, Shiqing Hua, Mariusz Jarmuzek, Wei Shi

February 20, 2024

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Format: Chicago

Marco Gross, Shiqing Hua, Mariusz Jarmuzek, and Wei Shi. Macroprudential Policy Calibration for Greece: Simulations for Borrower-Based Measures, (USA: International Monetary Fund, 2024) accessed November 21, 2024

Summary

The Greek financial system has remained resilient underpinned by strengthening banks’ balance sheets, but still faces significant challenges ahead including the re-emergence of imbalances in the real estate market. Recognizing these imbalances, the authorities have recently introduced the necessary legal framework for setting borrower-based measures (BBMs), paving the way to activate both income- and collateral-based measures in near term. Simulations, which employ a quantitative framework combining micro- and macro-level data, show that BBMs would help enhance household resilience, with synergies when caps on debt service-to-income (DSTI) and loan-to-value (LTV) ratios are jointly implemented, leading over time to the more resilient banking system against potential risks. Caps could initially be set at less binding levels and gradually tightened based on a systemic risk assessment.

Subject: Credit, Financial institutions, Financial sector policy and analysis, International organization, Loans, Macroprudential policy, Monetary policy, Money, Mortgages, Prices, Real estate prices

Keywords: Borrower-based measures, C. MACROPRUDENTIAL policy option, Credit, D. policy calibration, Global, Greece, Household micro data and modeling, Loans, LTV cap, Macroprudential policy, Mortgages, Policy simulation, Real estate prices

Publication Details

  • Pages:

    20

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Selected Issues Paper No. 2024/008

  • Stock No:

    SIPEA2024008

  • ISBN:

    9798400267383

  • ISSN:

    2958-7875

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