## _wp1365

## Source details

**Canonical URL:** [_wp1365](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2013/_wp1365.pdf)

## Other formats

- [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2013/_wp1365.pdf.md)
- [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2013/_wp1365.pdf.json)

---

### I. INTRODUCTION
- Periods of financial excess coincide with profit increases that create resistance to corrective policy (William White (2006) quoted).
- Macro-prudential orientation is necessary because traditional macroeconomic stabilization and micro-prudential policies leave a regulatory gap created by externalities and collective behavior.
- Macro-prudential frameworks must:
  - Take a system-wide view to contain systemic risk or deal with fallout.
  - Account for the political economy of regulation to ensure decision makers have authority and backbone to use macro-prudential tools when needed.
- Policy should combine a reasonably predictable “baseline” with a time-varying component added as conditions warrant.

### II. RULES-BASED MACRO-PRUDENTIAL REGULATION IS DIFFICULT
- Externalities justifying macro-prudential policy:
  - (i) interconnectedness of markets and intermediaries;
  - (ii) strategic complementarities generating correlated risks;
  - (iii) fire sales of financial assets inducing price declines and balance-sheet weakening.
- Macro-prudential approach dimensions:
  - Cross-sectional: risk distribution at a point in time.
  - Time dimension: evolution of aggregate risk; build cushions in booms for downturns.
- Policy strategies:
  - Time-invariant regulations (baseline policies).
  - Time-varying policies triggered when systemic risk is perceived as rising.
- Key operational challenges:
  - Measurement: systemic risk is hard to define; “tail events”; no comprehensive operational definition despite progress (Bisias and others (2012)).
  - Endogeneity of risk: fortifying individual institutions collectively can destabilize the system (Shin (2012a), Soros (2010)).
  - Amplification mechanisms: funding liquidity vs market liquidity (Brunnermeier and Pedersen (2009)); endogenous aggregate banking balance-sheet expansion and contraction (Shin (2012b)).
- Indicators and early warning:
  - Market-price-based indicators are useful for concurrent conditions but not reliable early warnings (Shin).
  - Credit growth metrics and composition of bank liabilities (e.g., ratio of non-core to total liabilities) are valuable but have real-time doubts.
  - IMF (2009) uses a variety of measures: network model, two asset correlation models, a systemic-defaults probability model, and an economy-wide Value-at-Risk model.
- Limits to rules-based time-varying policy:
  - Difficulty specifying the “event” (systemic risk beyond threshold) and the contingent “policy action” with credible implementation.
  - Comparison to monetary policy: inflation and interest rate link clearer; macro-prudential metrics are diffuse and often inadequate.
  - Goodhart (2011) proposal: use markers (rate of credit expansion; increases in property prices; growth of sectoral and economy-wide leverage) and require action or public explanation when at least two indicators grow significantly faster than average.
- Important numeric/design points to preserve:
  - Basel III counter-cyclical capital surcharge: up to 2.5 percent of risk-weighted assets guided by credit/GDP ratio (discretion on extent, timing, and interpretation).
  - Korea example: a 20 basis point charge on dollar-denominated wholesale funding combined with a leverage cap on foreign exchange derivative contracts.

### III. DISCRETION OPENS THE DOOR TO RESISTANCE
- Political economy and measurement uncertainty magnify lobbying scope against macro-prudential actions.
- Macro-prudential policy is more susceptible than monetary policy because:
  - It often targets specific sectors, increasing concentration of political resistance.
  - It requires coordination across multiple agencies (central bank, bank regulator, market regulator, Treasury, insurance regulator).
- Agencies involved:
  - Central Bank (monetary authority, liquidity provider).
  - Micro-prudential Bank Regulator.
  - Market Regulator (financial market).
  - Market Regulator (consumer protection).
  - Treasury / Ministry of Finance.
  - Other Regulators (Insurance, Competition, ...).
- Roles and tool-ownership:
  - Central bank: macroeconomic surveillance, systemic risk analysis, limited direct instruments (e.g., reserve requirements).
  - Bank regulator: most macro-prudential toolkit (systemic capital and liquidity surcharges; levy on non-core liabilities; rescaling risk weights; reducing loan-to-value (LTV) ratios; imposing credit growth caps).
  - Market regulators and others provide crucial information on market innovations and non-bank intermediation.
- Decision process vulnerabilities:
  - Soft information exchange can be manipulated.
  - Separation of decision maker from implementers requires cooperation; differing agency cultures can hinder timely implementation.
  - Public communication must be coordinated across agencies.
- Institutional assignment:
  - Many countries bestow macro-prudential mandate on the central bank or on a macro-prudential policy committee.
  - Supra-national frameworks magnify vulnerabilities (information loss across borders, implementation frictions).
  - Global concentration of systemic risk: 29 global systemically important financial institutions (G-SIFIs) identified by the Financial Stability Board.
- Central bank vs joint committee frameworks:
  - Central bank lead: unifies analysis and communication but may marginalize other agencies, risking loss of soft information and implementation cooperation; potential conflict with monetary policy incentives (e.g., “Greenspan Put” dynamic).
  - Joint committee: inclusive deliberation reduces inter-agency conflict and improves implementation buy-in, but may slow decisions, complicate communication, and expand channels for industry influence.
- Capture and funding risks:
  - Some bank regulators funded by supervised banks; others by Treasury — both can create channels for industry influence.
  - Operational independence requires funding and intellectual independence.

### IV. A STRONG BASELINE: REDUCING THE BURDEN ON TIME-VARYING POLICY
- Given measurement and political-economy difficulties, emphasis should be on a strong time-invariant baseline, supplemented by a time-varying component.
- Baseline objectives:
  - Create robust institutions in normal times.
  - Prevent or slow systemic risk build-up.
  - Keep regulations reasonably simple and tractable under uncertainty (Haldane (2012b)).
- Key reforms and instruments strengthening the baseline:
  - Increase quantity and quality of bank capital; debate on nature of bank capital, effectiveness of risk-weighting, and limits on raw leverage ratios.
  - Restrictions on bank structure and activities (examples: Volcker Rule, Vickers Rule, Liikanen Report recommendations).
  - Liquidity rules: liquidity-coverage ratio and net-stable funding ratio in new Basel standards.
  - Capital and liquidity surcharges for systemically important financial institutions (SIFIs); risk/size-adjusted deposit insurance premiums; more stringent leverage ratios for SIFIs.
  - Taxes or levies on non-core liabilities as an expansion deterrent (Korea example: 20 basis point charge).
- Shadow banking, money market funds, and repo markets:
  - Recognize bank-like roles and implicit guarantees; reforms include minimum liquidity, maximum maturity limits, issuer concentration limits, suspension of redemptions in crises, government insurance for appropriate fees, floating net asset values.
  - Repo market reforms: better collateral management, orderly unwinding to reduce panics and fire sales.
- Securitization and OTC derivatives:
  - Reforms to securitization chain: improve origination standards, transparency, incentive alignment, and information retention.
  - Migration of standardized derivatives to well-managed central counterparties for transparency and risk handling.
- Microprudential rules with macro-prudential effect:
  - Loan-to-value (LTV), debt-to-income (DTI), loan-to-income (LTI) ratios constrain borrower leverage and lender counterparty risk.
  - Several Asian countries implement significant LTV caps supplemented by time-varying measures: China, Hong Kong SAR, Singapore, India, Malaysia, Thailand, Republic of Korea.
  - Examples of time-varying measures: Singapore’s tax on foreigners for property; China’s restrictions on bank credit for real estate; India’s countercyclical changes in risk weights and loan provisioning.

### V. CONCLUDING REMARKS
- Macro-prudential policy complexity stems from:
  - Need for preemptive action for “tail events” with long intervals and fading public memory.
  - Difficulty detecting and measuring systemic fragilities due to complex interactions.
  - Multiple endogenous drivers of aggregate risk cycles that complicate early warning design.
  - Challenges of system-wide policymaking: collecting hard/soft data, surveillance, analysis, authority allocation, multi-agency coordination, and coherent public communication.
- Implementation implications:
  - Discretionary time-varying policy faces resistance; rules-based limits are constrained by measurement challenges.
  - Greater focus on having market participants internalize externalities via a strong baseline reduces reliance on time-varying intervention.
  - Conservative markers or thresholds should trigger public examination of trends and prompt appropriate public/private reactions.
  - Institutional design and incentives are critical to prevent emergence of systemic threats and to improve ability to coordinate and implement policy during stress.

*Content based solely on the supplied PDF content unit.*

### References .............................................................................................................

### References

### I. INTRODUCTION
- Periods of financial excess coincide with profit increases that create resistance to corrective policy (William White (2006) quoted).
- Macro-prudential orientation is necessary because traditional macroeconomic stabilization and micro-prudential policies leave a regulatory gap created by externalities and collective behavior.
- Macro-prudential frameworks must:
  - Take a system-wide view to contain systemic risk or deal with fallout.
  - Account for the political economy of regulation to ensure decision makers have authority and backbone to use macro-prudential tools when needed.
- Policy should combine a reasonably predictable “baseline” with a time-varying component added as conditions warrant.

### II. RULES-BASED MACRO-PRUDENTIAL REGULATION IS DIFFICULT
- Three types of externalities justifying macro-prudential policy (De Nicolò, Favara and Ratnovski (2012)):
  - (i) interconnectedness of markets and intermediaries;
  - (ii) strategic complementarities generating correlated risks;
  - (iii) fire sales of financial assets inducing price declines and balance-sheet weakening.
- Macro-prudential approach dimensions:
  - Cross-sectional: risk distribution at a point in time.
  - Time dimension: evolution of aggregate risk; build cushions in booms for downturns.
- Policy strategies:
  - Time-invariant regulations (baseline policies).
  - Time-varying policies triggered when systemic risk is perceived as rising.
- Key operational challenges:
  - Measurement: systemic risk is hard to define; “tail events”; no comprehensive operational definition despite progress (Bisias and others (2012)).
  - Endogeneity of risk: fortifying individual institutions collectively can destabilize the system (Shin (2012a), Soros (2010)).
  - Amplification mechanisms: funding liquidity vs market liquidity (Brunnermeier and Pedersen (2009)); endogenous aggregate banking balance-sheet expansion and contraction (Shin (2012b)).
- Indicators and early warning:
  - Market-price-based indicators are useful for concurrent conditions but not reliable early warnings (Shin).
  - Credit growth metrics and composition of bank liabilities (e.g., ratio of non-core to total liabilities) are valuable but have real-time doubts.
  - IMF (2009) uses a variety of measures: network model, two asset correlation models, a systemic-defaults probability model, and an economy-wide Value-at-Risk model.
- Limits to rules-based time-varying policy:
  - Difficulty specifying the “event” (systemic risk beyond threshold) and the contingent “policy action” with credible implementation.
  - Comparison to monetary policy: inflation and interest rate link clearer; macro-prudential metrics are diffuse and often inadequate.
  - Goodhart (2011) proposal: use markers (rate of credit expansion; increases in property prices; growth of sectoral and economy-wide leverage) and require action or public explanation when at least two indicators grow significantly faster than average.
- Important numeric/design points to preserve:
  - Basel III counter-cyclical capital surcharge: up to 2.5 percent of risk-weighted assets guided by credit/GDP ratio (discretion on extent, timing, and interpretation).
  - Korea example: a 20 basis point charge on dollar-denominated wholesale funding combined with a leverage cap on foreign exchange derivative contracts.

### III. DISCRETION OPENS THE DOOR TO RESISTANCE
- Political economy and measurement uncertainty magnify lobbying scope against macro-prudential actions.
- Macro-prudential policy is more susceptible than monetary policy because:
  - It often targets specific sectors, increasing concentration of political resistance.
  - It requires coordination across multiple agencies (central bank, bank regulator, market regulator, Treasury, insurance regulator).
- Agencies involved (Figure 2): Central Bank (monetary authority, liquidity provider); Micro-prudential Bank Regulator; Market Regulator (financial market); Market Regulator (consumer protection); Treasury / Ministry of Finance; Other Regulators (Insurance, Competition, ...).
- Roles and tool-ownership:
  - Central bank: macroeconomic surveillance, systemic risk analysis, limited direct instruments (e.g., reserve requirements).
  - Bank regulator: most macro-prudential toolkit (systemic capital and liquidity surcharges; levy on non-core liabilities; rescaling risk weights; reducing loan-to-value (LTV) ratios; imposing credit growth caps).
  - Market regulators and others provide crucial information on market innovations and non-bank intermediation.
- Decision process vulnerabilities (Figure 3):
  - Soft information exchange can be manipulated.
  - Separation of decision maker from implementers requires cooperation; differing agency cultures can hinder timely implementation.
  - Public communication must be coordinated across agencies.
- Institutional assignment:
  - Many countries bestow macro-prudential mandate on the central bank or on a macro-prudential policy committee (examples noted but not exhaustively listed).
  - Supra-national frameworks magnify vulnerabilities (information loss across borders, implementation frictions).
  - Global concentration of systemic risk: 29 global systemically important financial institutions (G-SIFIs) identified by the Financial Stability Board.
- Central bank vs joint committee frameworks (Figure 4):
  - Central bank lead: unifies analysis and communication but may marginalize other agencies, risking loss of soft information and implementation cooperation; potential conflict with monetary policy incentives (e.g., “Greenspan Put” dynamic).
  - Joint committee: inclusive deliberation reduces inter-agency conflict and improves implementation buy-in, but may slow decisions, complicate communication, and expand channels for industry influence.
- Capture and funding risks:
  - Some bank regulators funded by supervised banks; others by Treasury — both can create channels for industry influence.
  - Operational independence requires funding and intellectual independence.

### IV. A STRONG BASELINE: REDUCING THE BURDEN ON TIME-VARYING POLICY
- Given measurement and political-economy difficulties, emphasis should be on a strong time-invariant baseline, supplemented by a time-varying component.
- Baseline objectives:
  - Create robust institutions in normal times.
  - Prevent or slow systemic risk build-up.
  - Keep regulations reasonably simple and tractable under uncertainty (Haldane (2012b)).
- Key reforms and instruments strengthening the baseline:
  - Increase quantity and quality of bank capital; debate on nature of bank capital, effectiveness of risk-weighting, and limits on raw leverage ratios.
  - Restrictions on bank structure and activities (examples: Volcker Rule, Vickers Rule, Liikanen Report recommendations).
  - Liquidity rules: liquidity-coverage ratio and net-stable funding ratio in new Basel standards.
  - Capital and liquidity surcharges for systemically important financial institutions (SIFIs); risk/size-adjusted deposit insurance premiums; more stringent leverage ratios for SIFIs.
  - Taxes or levies on non-core liabilities as an expansion deterrent (Korea example: 20 basis point charge).
- Shadow banking, money market funds, and repo markets:
  - Recognize bank-like roles and implicit guarantees; reforms include minimum liquidity, maximum maturity limits, issuer concentration limits, suspension of redemptions in crises, government insurance for appropriate fees, floating net asset values.
  - Repo market reforms: better collateral management, orderly unwinding to reduce panics and fire sales.
- Securitization and OTC derivatives:
  - Reforms to securitization chain: improve origination standards, transparency, incentive alignment, and information retention.
  - Migration of standardized derivatives to well-managed central counterparties for transparency and risk handling.
- Microprudential rules with macro-prudential effect:
  - Loan-to-value (LTV), debt-to-income (DTI), loan-to-income (LTI) ratios constrain borrower leverage and lender counterparty risk.
  - Several Asian countries (China, Hong Kong SAR, Singapore, India, Malaysia, Thailand, Republic of Korea) implement significant LTV caps supplemented by time-varying measures.
  - Examples of time-varying measures: Singapore’s tax on foreigners for property; China’s restrictions on bank credit for real estate; India’s countercyclical changes in risk weights and loan provisioning.

### V. CONCLUDING REMARKS
- Macro-prudential policy complexity stems from:
  - Need for preemptive action for “tail events” with long intervals and fading public memory.
  - Difficulty detecting and measuring systemic fragilities due to complex interactions.
  - Multiple endogenous drivers of aggregate risk cycles that complicate early warning design.
  - Challenges of system-wide policymaking: collecting hard/soft data, surveillance, analysis, authority allocation, multi-agency coordination, and coherent public communication.
- Implementation implications:
  - Discretionary time-varying policy faces resistance; rules-based limits are constrained by measurement challenges.
  - Greater focus on having market participants internalize externalities via a strong baseline reduces reliance on time-varying intervention.
  - Conservative markers or thresholds should trigger public examination of trends and prompt appropriate public/private reactions.
  - Institutional design and incentives are critical to prevent emergence of systemic threats and to improve ability to coordinate and implement policy during stress.

*Content based solely on the supplied PDF content unit.*

### References

### _wp1365 - References

### Macroprudential policy, frameworks, and instruments
- Bank of England, 2009, “The Role of Macroprudential Policy,” Discussion Paper, November (London: Bank of England).
- Bank of England, 2011, “Instruments of Macroprudential Policy,” Discussion Paper, December (London: Bank of England).
- Bank for International Settlements, 2012b, “Operationalising the Selection and Application of Macroprudential Instruments,” CGFS, December, (Basel: BIS).
- Borio, Claudio, and Ilhyock Shim, 2009, “What Can (Macro-) Prudential Policy Do To Support Monetary Policy?” BIS Working Paper No. 242 (Basel: Bank for International Settlements).
- Borio, Claudio, 2011, “Implementing a Macroprudential Framework: Blending Boldness and Realism,” Capitalism and Society, Vol. 6, pp. 1-23.
- Claessens, Stijn, Zoltan Pozsar, Lev Ratnovski, and Manmohan Singh, 2012, “Shadow Banking: Economics and Policy,” IMF Staff Discussion Note, SDN/12/12, (Washington: IMF).
- Committee on the Global Financial System, 2010, “Macroprudential Instruments and Frameworks: A Stocktaking of Issues and Experiences,” CGFS Papers No. 38.
- De Nicolò, Gianni, Giovanni Favara, and Lev Ratnovski, 2012, “Externalities and Macro-prudential Regulation,” IMF Staff Discussion Note 12/05 (Washington: IMF).
- International Monetary Fund, 2011, “Macroprudential Policy: An Organizing Framework,” MCM Policy Paper, March (Washington: IMF).
- Kashyap, Anil K., Richard Berner, and Charles A.E. Goodhart, 2011, “The Macroprudential Toolkit,” IMF Economic Review, Vol. 59, No. 2, pp. 145-161.
- Lim, Cheng Hoon, Alejo Costa, Torsten Wezel, Akira Otani, Francesco Columba, Mustafa Sayid, Xiaoyong Wu, and Piyabha Kongsamut, 2011, “Macroprudential Policy: What Instruments and How to Use Them? Lessons from Country Experiences,” IMF Working Paper No. 11/238 (Washington: IMF).
- Nier, Erlend W., Jacek Osiński, Luis I. Jácome, and Pamela Madrid, 2011, “Towards Effective Macroprudential Policy Frameworks: An Assessment of Stylized Institutional Models,” IMF WP 11/250 (Washington: IMF).
- Schoenmaker, Dirk, and Peter Wierts, 2011, “Macro-Prudential Policy: The Need for a Coherent Policy Framework,” DSF Policy Paper, No. 13, July, (Duisenberg School of Finance: Amsterdam, The Netherlands).
- Siregar, Reza, 2011, “Macro-Prudential Approaches to Banking Regulation: Perspectives of Selected Asian Central Banks,” ADBI Working Paper No. 325, November, (Tokyo: ADB Institute).
- White, William, 2006, “Procyclicality in the Financial System: Do We Need a New Macro-Financial Stabilization Framework?” BIS Working Paper 193, (Basel: Bank for International Settlements).

### Regulation, supervision, and institutional design
- Acharya, Viral V., Thomas F. Cooley, Mathew Richardson and Ingo Walter (2011), Regulating Wall Street, (New York: John Wiley).
- Admati, Anat R., Peter M. DeMarzo, Martin F. Hellwig, and Paul Pfleiderer, 2010, “Fallacies, Irrelevant Facts, and Myths in the Discussion of Capital Regulation: Why Bank Equity is Not Expensive,” Stanford Graduate School of Business Research Paper, No. 2065, (Palo Alto: Stanford University).
- Admati, Anat, and Martin Hellwig, 2013, The Bankers’ New Clothes: What’s Wrong with Banking and What to Do about It, (Princeton: Princeton University Press).
- Angeloni, Ignazio, and Ester Faia, 2009, “A Tale of Two Policies: Prudential Regulation and Monetary Policy with Fragile Banks,” mimeo, (Frankfurt: European Central Bank and Goethe University).
- Baxter, Lawrence G., 2011-12, “Betting Big: Value, Caution and Accountability in an Era of Large Banks and Complex Finance,” Review of Banking and Financial Law, Vol. 31, pp. 765-877.
- Bini Smaghi, Lorenzo, 2009, “Going Forward: Regulation and Supervision after the Financial Turmoil,” speech by ECB Executive Board Member, June 19.
- Enriques, Luca and Gerard Hertig, 2010, “The Governance of Financial Supervisors: Improving Responsiveness to Market Developments,” ECGI Law Working Paper No. 171/2010 (Brussels: European Corporate Governance Institute).
- Fullenkamp, Connel, and Sunil Sharma, 2012, “Good Financial Regulation – Changing the Process is Crucial,” (London, U.K.: International Center for Financial Regulation). http://ssrn.com/abstract=2044217.
- Goodhart, Charles A.E., and Dirk Schoenmaker, 1995, “Should the Functions of Monetary Policy and Banking Supervision Be Separated?” Oxford Economic Papers, Vol. 47, pp. 539-560.
- Goodhart, Charles A.E., 2011, “The Macro-Prudential Authority: Powers, Scope and Accountability,” OECD Journal: Financial Market Trends, Vol. 2, pp. 1-26.
- Kremers, Jeroen, and Dirk Schoenmaker, 2012, “Financial Stability and Proper Business Conduct: Can Supervisory Structure Help to Achieve these Objectives,” mimeo.
- Masciandro, Donato, Marc Quintyn, and Michael W. Taylor, 2008, “Inside and Outside the Central Bank: Independence and Accountability in Financial Supervision – Trends and Determinants,” European Journal of Political Economy, Vol. 24, pp. 833-848.
- Pagliari, Stefano, ed., 2012, Making Good Financial Regulation: Towards a Policy Response to Regulatory Capture, International Centre for Financial Regulation, (Surrey, U.K.: Grosvenor House Publishing). http://www.stefanopagliari.net/making_good_financial_regul.pdf
- Rosen, Richard J., 2003, "Is Three a Crowd? Competition among Regulators in Banking," Journal of Money, Credit and Banking, Vol. 35(6, part I), pp. 968-998.

### Systemic risk, shadow banking, and too-big-to-fail
- Adrian, Tobias, and Markus Brunnermeier, 2008, “CoVaR,” Federal Reserve Bank of New York Staff Report, No. 348, September.
- Adrian, Tobias, Emanuel Moench, and Hyun Song Shin, 2010, “Macro Risk Premium and Intermediary Balance Sheet Quantities,” IMF Economic Review, Vol. 58, pp. 179-207.
- Aikman, David, Piergiorgio Alessandri, Bruno Eklund, Prasanna Gai, Sujit Kapadia, Elizabeth Martin, Nada Mora, Gabriel Sterne, and Matthew Willison, 2009, “Funding Liquidity Risk in a Quantitative Model of Systemic Stability,” Bank of England Working Paper No. 372.
- Brunnermeier, Markus K., and Lasse Heje Pedersen, 2009, "Market Liquidity and Funding Liquidity," Review of Financial Studies, Vol. 22, pp. 2201-2238.
- Brunnermeier, Markus K., Andrew D. Crockett, Charles A. E. Goodhart, Avinash D. Persaud, and Hyun S. Shin, 2009, The Fundamental Principles of Financial Regulation, Geneva Reports on the World Economy No. 11.
- Gorton, Gary, and Andrew Metrick, 2010, “Regulating the Shadow Banking System,” Brookings Papers on Economic Activity, Fall issue, pp. 261-312.
- Financial Stability Board, 2012, “Strengthening the Oversight and Regulation of Shadow Banking,” Progress Report to G20 Ministers and Governors, April 16 (Basel: Bank for International Settlements).
- Ӧtker-Robe, Inci, Aditya Narain, Anna Ilyina and Jay Surti, 2011, “The Too-Important-to-Fail Conundrum: Impossible to Ignore and Difficult to Resolve,” IMF Staff Discussion Note SDN/11/12, May 27, (Washington: IMF).
- Morrison, Alan D., 2011, “Systemic Risks and the Too-Big-to-Fail Problem,” Oxford Review of Economic Policy, Vol. 27, No. 3, pp. 498-516.
- Hoenig, Thomas, 2011, “Do SIFIs have a future,” Speech at Pew Financial Reform Project and NYU Stern School of Business seminar on “Dodd-Frank One Year On,” June 27, Washington, D.C., (Kansas City: Federal Reserve Bank of Kansas City).
- Hoenig, Thomas, and Charles S. Morris, 2012, “Restructuring the Banking System to Improve Safety and Soundness,” mimeo, (Washington: Federal Deposit Insurance Corporation).
- Rajan, Raghuram, 2009, “Too Systemic to Fail: Consequences, Causes, and Potential Remedies,” US Senate Banking Committee Hearings, May 6.

### Liquidity, funding, and market dynamics
- Brunnermeier, Markus K., and Lasse Heje Pedersen, 2009, "Market Liquidity and Funding Liquidity," Review of Financial Studies, Vol. 22, pp. 2201-2238.
- Haldane, Andrew G., 2012a, “Tails of the Unexpected” speech at the University of Edinburgh, June 8, (London: Bank of England).
- Haldane, Andrew G., 2012b, “The Dog and the Frisbee,” speech at the Federal Reserve Bank of Kansas City’s Jackson Hole Conference, August 31, (London: Bank of England).
- Shin, Hyun Song, 2012a, “Global Banking Glut and Loan Risk Premium,” IMF Economic Review, Vol. 60, pp. 155-192.
- Shin, Hyun Song, 2012b, “Procyclicality and the Search for Early Warning Indicators,” mimeo, (Princeton: Princeton University).
- Singh, Manmohan, 2010, “Collateral, Netting and Systemic Risk in the OTC Derivatives Market,” IMF Working Paper 10/99 (Washington: IMF).
- Singh, Manmohan, 2012, “Puts in the Shadow,” IMF Working Paper 12/229 (Washington: IMF).
- Shleifer, Andrei, Robert Vishny, 2011, “Fire Sales in Finance and Macroeconomics,” Journal of Economic Perspectives, Vol. 25, No. 1, pp. 29-48.

### Capital, contingent capital, and bank structure
- Admati, Anat R., Peter M. DeMarzo, Martin F. Hellwig, and Paul Pfleiderer, 2010, “Fallacies, Irrelevant Facts, and Myths in the Discussion of Capital Regulation: Why Bank Equity is Not Expensive,” Stanford Graduate School of Business Research Paper, No. 2065, (Palo Alto: Stanford University).
- Admati, Anat, and Martin Hellwig, 2013, The Bankers’ New Clothes: What’s Wrong with Banking and What to Do about It, (Princeton: Princeton University Press).
- Hart, Oliver, and Luigi Zingales, 2011, “A New Capital Regulation for Large Financial Institutions,” American Law and Economics Review, Vol. 13, No. 2 (Fall), pp. 453-490.
- Le Leslé, Vanessa, and Sofiya Avramova, 2012, “Revisiting Risk-Weighted Assets,” IMF Working Paper WP/12/90, (Washington: IMF).
- Pazarbasioglu, Ceyla, Jianping Zhou, Vanessa Le Leslé and Michael Moore, 2011, Contingent Capital: Economic Rationale and Design Features, IMF Staff Discussion Note, No. SDN/11/01, (Washington: IMF).
- Duffie, Darrell, 2011, How Big Banks Fail and What to Do about It, (Princeton: Princeton University Press).

### Research methods, analytics, and models of systemic risk
- Bisias, Dimitrios, Mark Flood, Andrew W. Lo and Stavros Valavanis, 2012, “A Survey of Systemic Risk Analytics,” US Treasury, Office of Financial Research Working Paper No. 0001, Washington, D.C., USA.
- Galati, Gabriele, and Richhild Moessner, 2011, “Macroprudential Policy – A Literature Review,” BIS Working Paper No. 337 (Basel: Bank for International Settlements).
- Nier, Erlend W., Jing Yang, Tanju Yorulmazer, and Amadeo Alentorn, 2007, “Network Models and Financial Stability,” Journal of Economic Dynamics and Control, Vol. 31, pp. 2033-2060.
- Goodhart, Charles A. E., Carolina Osorio, and Dimitrios P. Tsomocos, 2009, “Analysis of Monetary Policy and Financial Stability: A New Paradigm,” CESifo Working Paper No. 2885.
- Goodhart, Charles A. E., Anil. K. Kashyap, Dimitrios P. Tsomocos, and Alexandros P. Vardoulakis, 2013, “An Integrated Framework for Analyzing Multiple Financial Regulators,” International Journal of Central Banking, Vol. 9, No. 1, pp. 109-144.
- Hanson, Samuel G., Anil K. Kashyap, and Jeremy C. Stein, 2011, “A Macroprudential Approach to Financial Regulation,” Journal of Economic Perspectives, Vol. 25, No. 1, (Winter), pp. 3-28.

### Policy debate, reform proposals, and commentary
- Bair, Sheila, 2012, Bull by the Horns: Fighting to Save Main Street from Wall Street and Wall Street from Itself, (New York: Free Press).
- Blinder, Alan, 2013, After the Music Stopped: The Financial Crisis, The Response, and the Work Ahead, (New York: The Penguin Press).
- Fisher, Richard W., 2013, “Ending ‘Too-Big-to-Fail’: A Proposal for Reform Before it’s Too Late,” Remarks before the Committee for the Republic, Washington, DC, January 16, (Dallas: Federal Reserve Bank of Dallas).
- French, Kenneth R. and others, 2010, Fixing the Financial System, The Squam Lake Report, (Princeton, NJ: Princeton University Press).
- Connaughton, Jeff, 2012, The Payoff: Why Wall Street Always Wins, (Westport, CT, USA: Prospecta Press).
- Pagliari, Stefano, ed., 2012, Making Good Financial Regulation: Towards a Policy Response to Regulatory Capture, International Centre for Financial Regulation, (Surrey, U.K.: Grosvenor House Publishing).
- Soros, George, 2010, The Soros Lectures: At the Central European University, (New York: Public Affairs).
- Taylor, Michael W, 2012, “Regulatory Reform after the Financial Crisis: Twin Peaks Revisited,” mimeo.
- Carmichael, Jeff, 2012, “Implementing Twin Peaks: Lessons from Australia,” mimeo.
- Wadhwani, Sushil, 2010, “What Mix of Monetary Policy and Regulation is Best for Stabilizing the Economy,” in The Future of Finance: the LSE Report, (London: London School of Economics and Political Science).

*Reference list from _wp1365 - References*

---


_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2013/_wp1365.pdf_