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Experiences with Macroprudential Policy

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Experiences with Macroprudential Policy

Five Case Studies

IMF,

5 min read
5 take-aways
Audio & text

What's inside?

The implementation and effects of the macroprudential regulation of financial systems varies across different economies.

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Editorial Rating

7

Recommendation

The severity of the Great Recession awakened economic leaders to the need for financial stability policies that address risks to the global economy, specifically those arising from fragile banking systems and uncontrolled leverage in the housing sector. This recap from the International Monetary Fund of how five diverse economies have addressed their macroprudential regulatory needs offers evidence of some early successes. getAbstract recommends this broad and cogent report to central bankers, economists and policy makers.

Summary

Though the aim of financial regulation is the same across economies, no single approach will work for every one. Policy design is a function of a country’s or region’s financial system. Though regulations are still new and their effects are not yet fully realized, five economies present some useful lessons in macroprudential regulation:

  • Hong Kong Special Administrative Region – With one of the world’s biggest financial sectors, Hong Kong SAR boasts robust securities markets and profitable, liquid and well-capitalized banks. But residential property prices are soaring. Monetary authorities have set limits on loan-to-value (...

About the Authors

Salim M. Darbar and Xiaoyong Wu are economists at the International Monetary Fund.


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