## Borrower-Based Macroprudential Instruments in Germany

_Selected Issues Papers, July 24, 2023_

## Source details

**Canonical URL:** [Borrower-Based Macroprudential Instruments in Germany](https://www.imf.org/en/publications/selected-issues-papers/issues/2023/07/24/borrower-based-macroprudential-instruments-in-germany-536843)

## Other formats

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## Bibliographic details
- Authors: Galen Sher
- Published: July 24, 2023
- Series: Selected Issues Papers
- DOI: https://doi.org/10.5089/9798400250965.018

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### Key findings
- Germany’s macroprudential policy toolkit is well-developed, but its key missing piece is a set of instruments related to a borrower’s income.
- Existing powers to adopt LTV limits have not yet been deployed.
- Borrower-based measures could strengthen:
  - financial stability,
  - macroeconomic stability,
  - consumer protection.
- A microsimulation model in the paper shows that activating borrower-based measures could provide as much capital to the banking system as the capital buffer requirements that were activated in 2022.

### Policy analysis and recommendations
- The paper explains how potential concerns about borrower-based instruments could be addressed.
- It offers approaches to initial calibrations of instruments for further analysis.
- The paper hints at likely effects based on other countries’ experiences.

### Modeling, calibrations, and scenarios
- Uses a microsimulation model to compare the capital-provision effects of borrower-based measures with the capital buffer requirements activated in 2022.
- Provides example calibrations and references to a housing market crash scenario and a reference scenario as analytical contexts.

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## Content in this bundle

- **Sipea2023060**
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_Source: https://www.imf.org/en/publications/selected-issues-papers/issues/2023/07/24/borrower-based-macroprudential-instruments-in-germany-536843_