Key Aspects of Macroprudential Policy - Background Paper
IMF, June 10, 2013
http://www.imf.org/external/pp/longres.aspx?id=4804
Summary
The countercyclical capital buffer (CCB) was proposed by the Basel committee to increase the resilience of the banking sector to negative shocks. The interactions between banking sector losses and the real economy highlight the importance of building a capital buffer in periods when systemic risks are rising. Basel III introduces a framework for a time-varying capital buffer on top of the minimum capital requirement and another time-invariant buffer (the conservation buffer). The CCB aims to make banks more resilient against imbalances in credit markets and thereby enhance medium-term prospects of the economy—in good times when system-wide risks are growing, the regulators could impose the CCB which would help the banks to withstand losses in bad times.
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IMF: Implementing Macroprudential Policy - Selected Legal Issues
IMF, June 10, 2013
http://www.imf.org/external/pp/longres.aspx?id=4802
Summary
As countries design and implement macroprudential policies, they face the challenge of determining what—if any—changes need to be made to their legal and institutional framework to ensure that these policies are effective. Based on a review of experience, it is clear that there are a variety of approaches that can be taken by members, in light of the legal constraints and institutional preferences of each country. Whichever approach is followed, a number of issues need to be addressed when designing legislation in this area, both with respect to the substantive legal provisions and the allocation of institutional responsibilities. As background to ”Key Aspects of Macroprudential Policy“, this paper provides an overview of these legal and institutional issues, while recognizing that macroprudential policy is an area that is still evolving.
Monday, September 16, 2013
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