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An Overview of Macroprudential Policy Tools


  • Stijn Claessens

    () (Division of International Finance, Board of Governors of the Federal Reserve System, Washington, DC 20551)


Macroprudential policies—caps on loan to value ratios, limits on credit growth and other balance-sheet restrictions, (countercyclical) capital and reserve requirements and surcharges, and Pigouvian levies—have become part of the policy paradigm in emerging markets and developed countries alike. But knowledge of these tools is still limited. Macroprudential policies ought to be motivated by market failures and externalities, but these can be hard to identify. They may also interact with various other policies, such as monetary and microprudential, raising coordination issues. Countries, especially emerging markets, have used these tools, and analyses suggest that some of those tools reduce procyclicality and crisis risks. Yet, much remains to be studied, including the costs of such tools, as they may adversely affect resource allocations; how best to adapt these tools to a country's circumstances; and preferred institutional designs, including how to address political economy risks. As such, policy makers should move carefully in adopting these tools.

Suggested Citation

  • Stijn Claessens, 2015. "An Overview of Macroprudential Policy Tools," Annual Review of Financial Economics, Annual Reviews, vol. 7(1), pages 397-422, December.
  • Handle: RePEc:anr:refeco:v:7:y:2015:p:397-422
    DOI: 10.1146/annurev-financial-111914-041807

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    More about this item


    externalities; financial intermediation; financial stability; macroprudential policies; market failures; procyclicality; systemic risks;

    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation


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