Towards Effective Macroprudential Policy Frameworks: An Assessment of Stylized Institutional Models

By Erlend Nier, Luis Ignacio Jácome, Jacek Osinski, Pamela Madrid

November 1, 2011

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Erlend Nier, Luis Ignacio Jácome, Jacek Osinski, and Pamela Madrid. Towards Effective Macroprudential Policy Frameworks: An Assessment of Stylized Institutional Models, (USA: International Monetary Fund, 2011) accessed September 19, 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

A number of countries are reviewing their institutional arrangements for financial stability to support the development of a macroprudential policy function. In some cases, this involves a rethink of the appropriate institutional boundaries between central banks and financial regulatory agencies, or the setting up of dedicated policymaking committees. In others, efforts are underway to enhance cooperation within the existing institutional structure. Against this background, this paper provides basic guidance for the design of effective arrangements, in a manner that can provide a framework for country-specific advice. After reviewing briefly the main institutional elements of existing and emerging macroprudential policy frameworks across countries, the paper identifies stylized institutional models based on key features that distinguish institutional arrangements. It develops criteria to assess the effectiveness of models, examines the strengths and weaknesses of models against these criteria, and explores ways to improve existing setups. The paper finally distills lessons and sets out desired principles for effective macroprudential policy arrangements.

Subject: Banking, Financial regulation and supervision, Financial sector policy and analysis, Financial sector stability, Institutional arrangements for revenue administration, Macroprudential policy, Revenue administration, Systemic risk

Keywords: Authority, Central bank, Central bank incentive, Central banks cuts rates, Country, Credit policies task, Current account, Europe, Financial sector stability, Governance, Government representation, Institutional arrangements for revenue administration, Institutions, Macroprudential policy, Policy effectiveness, Policy field, Policy mandate, Policy outcome, Prudential policy, Regulatory authority, Risk assessment, Supervisory function, Systemic risk, WP

Publication Details

Pages:

51
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2011/250
Stock No:

WPIEA2011250
ISBN:

9781463923327
ISSN:

1018-5941

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