Macroprudential Policy Calibration for Greece: Simulations for Borrower-Based Measures
Selected Issues Papers, February 20, 2024
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- Macroprudential Policy Calibration for Greece: Simulations for Borrower-Based Measures
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Bibliographic details
- Authors: Marco Gross, Shiqing Hua, Mariusz Jarmuzek, Wei Shi
- Published: February 20, 2024
- Series: Selected Issues Papers
- DOI: https://doi.org/10.5089/9798400267383.018
Key Findings and Context
- 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.
- 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 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.
- Joint implementation of DSTI and LTV caps leads over time to a 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.
Simulations and Methodology
- Simulations employ a quantitative framework combining micro- and macro-level data.
- Results emphasize complementarities between income-based (DSTI) and collateral-based (LTV) measures in strengthening household and banking system resilience.
Policy Recommendations and Calibration Guidance
- Activate both income- and collateral-based BBMs in the near term, leveraging the new legal framework.
- Consider initial BBM caps that are less binding and progressively tighten them guided by systemic risk assessments.
- Use joint DSTI and LTV caps to achieve synergies that enhance resilience across households and banks.
Publication and Metadata
- Authors: Marco Gross, Shiqing Hua, Mariusz Jarmuzek, Wei Shi
- Date: February 20, 2024
- Series: Selected Issues Paper No. 2024/008
- Issue: 008
- Volume: 2024
- Pages: 20
- DOI: https://doi.org/10.5089/9798400267383.018
- ISBN: 9798400267383
- ISSN: 2958-7875
- Subject 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
IMF Selected Issues Paper: "Macroprudential Policy Calibration for Greece: Simulations for Borrower-Based Measures" (February 20, 2024).
Content in this bundle
- Conclusions and Policy Implications