Macroprudential and Microprudential Policies: Toward Cohabitation

By Jacek Osinski, Katharine Seal, Lex Hoogduin

June 21, 2013

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Jacek Osinski, Katharine Seal, and Lex Hoogduin. Macroprudential and Microprudential Policies: Toward Cohabitation, (USA: International Monetary Fund, 2013) accessed September 20, 2024

Disclaimer: This Staff Discussion Note represents the views of the authors and does not necessarily represent IMF views or IMF policy. The views expressed herein should be attributed to the authors and not to the IMF, its Executive Board, or its management. Staff Discussion Notes are published to elicit comments and to further debate.

Summary

Effective arrangements for micro and macroprudential policies to further overall financial stability are strongly desirable for all countries, emerging or advanced. Both policies complement each other, but there can also be potential areas of overlap and conflict, which can complicate this cooperation. Organizing their very close interactions can help contain these potential tensions. This note clarifies the essential features of macroprudential and microprudential policies and their interactions, and delineates their borderline. It proposes mechanisms for aligning both policies in the pursuit of financial stability by identifying those elements that are desirable for effective cooperation between them. The note provides general guidance. Actual arrangements will need take into account country-specific circumstances, reflecting the fact that that there is no “one size fits all.”

Subject: Countercyclical capital buffers, Financial regulation and supervision, Financial sector policy and analysis, Financial sector stability, Macroprudential policy, Microprudential policy, Systemic risk

Keywords: Authorities' policy action, Capital buffer, Central bank, Condition market expectation, Countercyclical capital buffers, Financial cycle, Financial sector stability, Financial stability, Macroprudential authority, Macroprudential policy, Microprudential policy, Policy action, Policy debate, Policy framework, Policy impasse, Policy mandate, Risk assessment, SDN, Supervision, Systemic risk

Publication Details

Pages:

28
Volume:

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DOI:

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Issue:

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Series:

Staff Discussion Notes No. 2013/005
Stock No:

SDNEA2013005
ISBN:

9781484369999
ISSN:

2617-6750

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