## Policies to Prevent Crises on the Rise

_IMF News, September 20, 2016_

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**Canonical URL:** [Policies to Prevent Crises on the Rise](https://www.imf.org/en/news/articles/2016/09/13/na091416mcmmacroprudential)

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## Bibliographic details
- Published: September 20, 2016

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### Overview and context
- Publication date: September 20, 2016
- Author: Erlend Nier, Monetary and Capital Markets Department
- Core message: Since the global financial crisis of 2008, a growing number of countries—both emerging and advanced economies—are turning to macroprudential policies to contain system-wide financial risk and either increase resilience or “lean against” a renewed build-up of risks.

### Adoption and tools
- Initially pioneered by emerging market economies such as Korea and Hong Kong SAR.
- Now common in advanced economies, including the United States and Europe.
- Common macroprudential tools cited:
  - requirements for cash on hand and capital
  - loan restrictions, such as caps on loan-to-value and debt-to-income ratios

### New IMF-FSB-BIS paper for the G20: scope and findings
- Produced jointly by the International Monetary Fund, the Financial Stability Board, and the Bank for International Settlements for the G20 leaders’ summit in Hangzhou, China.
- Main finding: countries need an ongoing process that translates risk assessment into policy actions to contain systemic risks.
- The process involves five key steps:
  - designing the policy response in a manner that targets well-identified risks while avoiding unnecessary costs;
  - assessing and addressing the potential for circumvention of macroprudential tools;
  - evaluating ex post the impact of macroprudential intervention and re-considering the selection and design of tools;
  - considering the potential for macroprudential tools to be relaxed;
  - improving the information base for macroprudential policy across all areas noted above.
- Note: In practice, these elements are typically considered jointly rather than sequentially.

### IMF advice and institutional work
- IMF provides country-specific advice on macroprudential policy through:
  - the Financial Sector Assessment Program (FSAP)
  - regular surveillance of countries’ economies (annual assessments)
- Since the global financial crisis, the FSAP has become mandatory for countries with systemically important financial systems.
- The IMF has issued a Guidance Note on Macroprudential Policy to guide staff analysis.
- Financial assessments now typically provide in-depth assessments of macroprudential policy settings and institutional arrangements in countries such as the United States, the United Kingdom, and Ireland.
- Surveillance (annual assessments) increasingly provides advice on macroprudential issues.

### Policy objective
- Strengthen member countries’ willingness and ability to use macroprudential policy tools with the aim of reducing the frequency and severity of financial crises worldwide.

*Source: Policies to Prevent Crises on the Rise (IMF News, September 20, 2016).*

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## Content in this bundle

- [083116 (PDF)](/external/np/g20/pdf/2016/083116.pdf){rel="external" type="application/pdf"}
- [110614 (PDF)](/external/np/pp/eng/2014/110614.pdf){rel="external" type="application/pdf"}
- [Country Report (PDF)](/external/pubs/ft/scr/2015/cr15170.pdf){rel="external" type="application/pdf"}
- [Country Report (PDF)](/external/pubs/ft/scr/2016/cr16167.pdf){rel="external" type="application/pdf"}
- [Country Report (PDF)](/external/pubs/ft/scr/2016/cr16258.pdf){rel="external" type="application/pdf"}

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## References

- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Policy](https://www.imf.org/en/news/search)
- [macroprudential policies](http://www.elibrary.imf.org/view/IMF073/22787-9781513502137/22787-9781513502137/22787-9781513502137.xml?highlight=true&redirect=true&result=1&rskey=865Vkh)
- [What is macroprudential policy?](https://blog-imfdirect.imf.org/2011/04/08/macroprudential-policy-filling-the-black-hole/)
- [Financial Sector Assessment Program](http://www.imf.org/en/About/Factsheets/Sheets/2016/08/01/16/14/Financial-Sector-Assessment-Program)
- [surveillance](http://www.imf.org/en/About/Factsheets/IMF-Surveillance)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2016/09/13/na091416mcmmacroprudential_