## Macroprudential Policy: What Instruments and How to Use them? Lessons From Country Experiences

_IMF Working Papers, October 1, 2011_

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## Bibliographic details
- Published: October 1, 2011
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781463922603.001

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### Summary
- This paper provides the most comprehensive empirical study of the effectiveness of macroprudential instruments to date.
- Using data from 49 countries, the paper evaluates the effectiveness of macroprudential instruments in reducing systemic risk over time and across institutions and markets.
- The analysis suggests that many of the most frequently used instruments are effective in reducing pro-cyclicality.
- The effectiveness is sensitive to the type of shock facing the financial sector.
- The paper identifies conditions under which macroprudential policy is most likely to be effective, as well as conditions under which it may have little impact.

### Key findings on effectiveness
- Many frequently used macroprudential instruments are effective in reducing pro-cyclicality.
- Effectiveness varies across institutions and markets.
- Effectiveness is sensitive to the type of shock facing the financial sector.

### Policy implications and conditions for effectiveness
- The paper identifies conditions under which macroprudential policy is most likely to be effective.
- The paper also identifies conditions under which macroprudential policy may have little impact.

### Subject areas and keywords
- Subject: Credit; Currencies; Exchange rate arrangements; Financial crises; Financial sector policy and analysis; Foreign exchange; Macroprudential policy; Money; Systemic risk
- Keywords: capital; credit; credit growth; deposit ratio; Eastern Europe; exchange rate; Exchange rate arrangements; fiscal policy tool; foreign currency; growth decline; instruments; interconnectedness; interest rate; liquidity; macroprudential; Macroprudential policy; monetary policy; price inflation; procyclicality; systemic risk; WP

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/macroprudential-policy-what-instruments-and-how-to-use-them-lessons-from-country-experiences-25296_