Coordination Incentives in Cross-Border Macroprudential Regulation
AbstractWe discuss (dis)incentives for fair cooperation related to delegating macroprudential policy decisions to a supranational body, as well as their welfare implications. The question is studied by means of a signaling game of imperfect information between two national regulators. The model concentrates on informational frictions in an environment with otherwise fully aligned preferences. We show that even in the absence of evident conflicting goals, the non-transferrable nature of some regulatory information creates misreporting incentives. However, the major problem is not the reporting accuracy but the institutional arrangement focused on maximal multilateral satisfaction to the detriment of credible enforcement of rules. The main application is meant to be systemic risk management by the relevant EU institutions.
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Bibliographic InfoPaper provided by Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies in its series Working Papers IES with number 2012/21.
Date of creation: Jul 2012
Date of revision: Jul 2012
macroprudential regulation; integration; autonomy; information; reporting;
Other versions of this item:
- Alexis Derviz & Jakub Seidler, 2012. "Coordination Incentives in Cross-Border Macroprudential Regulation," Working Papers 2012/08, Czech National Bank, Research Department.
- F55 - International Economics - - International Relations and International Political Economy - - - International Institutional Arrangements
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
- D02 - Microeconomics - - General - - - Institutions: Design, Formation, and Operations
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-10-06 (All new papers)
- NEP-BAN-2012-10-06 (Banking)
- NEP-CTA-2012-10-06 (Contract Theory & Applications)
- NEP-IUE-2012-10-06 (Informal & Underground Economics)
- NEP-RMG-2012-10-06 (Risk Management)
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