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Recent Experience of European Countries with Macro-Prudential Policy

Author

Listed:
  • Kok, Christoffer
  • Martin, Reiner
  • Moccero, Diego
  • Sandström, Maria

Abstract

The global financial crisis revealed a need for macro-prudential policy tools to mitigate the build-up of systemic risk in the financial system and to enhance the resilience of financial institutions against such risks once they have materialised. In the EU, macro-prudential policy is an area that is in an early stage of development. This is also true as regards the use of instruments to address systemic risk for which there is so far only limited experience to draw on. Hence, there is general uncertainty about the effectiveness of such instruments in practice. Nevertheless, country-level experience can serve as a useful yardstick for formulating macro-prudential policy in the EU. This special feature considers the experience of European countries with macro-prudential policy implementation. Overall, the evidence surveyed here indicates that macro-prudential policies can be effective in targeting excessive credit growth and rapidly rising asset prices, although other policies can be a useful complement to reduce the build-up of imbalances. At the same time, the appropriate timing of macro-prudential policy measures remains a challenging task. JEL Classification: G00

Suggested Citation

  • Kok, Christoffer & Martin, Reiner & Moccero, Diego & Sandström, Maria, 2014. "Recent Experience of European Countries with Macro-Prudential Policy," Financial Stability Review, European Central Bank, vol. 1.
  • Handle: RePEc:ecb:fsrart:2014:0001:1
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    File URL: https://www.ecb.europa.eu//pub/pdf/fsr/art/ecb.fsrart201405_01.en.pdf
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    More about this item

    Keywords

    excessive credit growth; macro-prudential policy; systemic risk;

    JEL classification:

    • G00 - Financial Economics - - General - - - General

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