Adapting Macropudential Policies to Global Liquidity Conditions
AbstractThis paper outlines an approach to macroprudential policy for open emerging economies that emphasizes banking sector balance sheet management as the key driver of risk premiums, capital flows and vulnerabilities to sudden reversals in global liquidity conditions. This paper argues for the usefulness of monitoring the "non-core liabilities" of the banking sector as a signal of lending standards and potential vulnerability of the financial system to shocks. The paper presents a taxonomy of macroprudential tools, ranging from orthodox tools for bank capital regulation to more novel "liabilities-side" tools, such as the levy on non-core liabilities recently introduced by South Korea.
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Bibliographic InfoPaper provided by Central Bank of Chile in its series Working Papers Central Bank of Chile with number 671.
Date of creation: Jul 2012
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-07-29 (All new papers)
- NEP-BAN-2012-07-29 (Banking)
- NEP-IFN-2012-07-29 (International Finance)
- NEP-MAC-2012-07-29 (Macroeconomics)
- NEP-RMG-2012-07-29 (Risk Management)
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