{
  "title": "Rules, Discretion, and Macro-Prudential Policy",
  "publication": "IMF Working Papers, March 8, 2013",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/rules-discretion-and-macro-prudential-policy-40379",
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  "summary": "The paper examines the implementation of macro-prudential policy. Given the coordination, flow of information, analysis, and communication required, macro-prudential frameworks will have weaknesses that make it hard to implement policy.",
  "sections": [
    {
      "heading": "Authors and Publication",
      "content": "- By Itai Agur, Sunil Sharma\n- March 8, 2013\n- IMF Working Papers, Series: Working Paper No. 2013/065\n- Issue: 065\n- Volume: 2013\n- Pages: 32\n- DOI: https://doi.org/10.5089/9781475546699.001\n- ISBN: 9781475546699\n- ISSN: 1018-5941\n- Stock No: WPIEA2013065"
    },
    {
      "heading": "Core findings on implementation challenges",
      "content": "- Macro-prudential frameworks require coordination, flow of information, analysis, and communication, which create weaknesses that make implementation difficult.\n- Dealing with the political economy of macro-prudential policy is likely to be challenging.\n- Limiting discretion by formulating macro-prudential rules is complicated by difficulties in detecting and measuring systemic risk.\n- Oversight is best served by having a strong baseline regulatory regime on which a time-varying macro-prudential policy can be added as conditions warrant and permit."
    },
    {
      "heading": "Subject areas and keywords",
      "content": "- Subject: Asset and liability management; Banking; Commercial banks; Financial crises; Financial institutions; Financial sector policy and analysis; Liquidity; Systemic risk; Systemic risk assessment\n- Keywords: bank; bank regulator; central bank; central bank leadership; Commercial banks; financial stability; Global; input consist; liquid asset; Liquidity; Macro-prudential policy; market; market liquidity; markets regulator; regulation; regulator; repo market; systemic risk; Systemic risk assessment; WP"
    },
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      "heading": "Policy implications and recommendations",
      "content": "- Maintain a strong baseline regulatory regime as the foundation for oversight.\n- Implement time-varying macro-prudential measures layered on the baseline regime when conditions warrant and permit.\n- Recognize and plan for institutional and informational weaknesses inherent in macro-prudential frameworks.\n- Account explicitly for political economy constraints when designing macro-prudential frameworks.\n- Exercise caution in relying exclusively on rule-based limits to discretion given challenges in detecting and measuring systemic risk.\n\nSource: IMF Working Paper \"Rules, Discretion, and Macro-Prudential Policy\" by Itai Agur and Sunil Sharma, March 8, 2013.\n\n---\n\n Content in this bundle\n\n- wp1365\n  - wp1365 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp1365 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/rules-discretion-and-macro-prudential-policy-40379"
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    "Authors: Itai Agur, Sunil Sharma",
    "Published: March 8, 2013",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781475546699.001",
    "By Itai Agur, Sunil Sharma",
    "March 8, 2013",
    "IMF Working Papers, Series: Working Paper No. 2013/065",
    "Issue: 065",
    "Volume: 2013",
    "Pages: 32",
    "DOI: https://doi.org/10.5089/9781475546699.001",
    "ISBN: 9781475546699",
    "ISSN: 1018-5941",
    "Stock No: WPIEA2013065",
    "Macro-prudential frameworks require coordination, flow of information, analysis, and communication, which create weaknesses that make implementation difficult.",
    "Dealing with the political economy of macro-prudential policy is likely to be challenging.",
    "Limiting discretion by formulating macro-prudential rules is complicated by difficulties in detecting and measuring systemic risk.",
    "Oversight is best served by having a strong baseline regulatory regime on which a time-varying macro-prudential policy can be added as conditions warrant and permit.",
    "Subject: Asset and liability management; Banking; Commercial banks; Financial crises; Financial institutions; Financial sector policy and analysis; Liquidity; Systemic risk; Systemic risk assessment",
    "Keywords: bank; bank regulator; central bank; central bank leadership; Commercial banks; financial stability; Global; input consist; liquid asset; Liquidity; Macro-prudential policy; market; market liquidity; markets regulator; regulation; regulator; repo market; systemic risk; Systemic risk assessment; WP",
    "Maintain a strong baseline regulatory regime as the foundation for oversight.",
    "Implement time-varying macro-prudential measures layered on the baseline regime when conditions warrant and permit.",
    "Recognize and plan for institutional and informational weaknesses inherent in macro-prudential frameworks.",
    "Account explicitly for political economy constraints when designing macro-prudential frameworks.",
    "Exercise caution in relying exclusively on rule-based limits to discretion given challenges in detecting and measuring systemic risk.",
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