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Macroprudential regulation as an element of ensuring financial stability

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  • A. Shkliar

Abstract

The paper reveals the essence and importance of macro-prudential regulation in ensuring financial stability, which was defined by leading central banks as one of the key priorities. The result of the evolution of prudential approach became the move from micro-prudential supervision, based on the analysis of institutions' individual measures, to macro-prudential supervision, which is aimed at supporting financial stability of the system as a whole. The defined goals, objectives, dimensions and components of macro-prudential regulations are focused on systemic risk elimination, prediction and early reaction to the distortions arising in a financial system. The outlined principles of macroprudential regulation show that it is not a certain type of institutions that should be regulated, but risky behavior of any market player, who can deteriorate the financial stability. The analyses of macroprudential instruments shows that, being aimed at guaranteeing financial stability, macroprudential policy should be synchronized with other policies, in particular the monetary and fiscal ones. The existing institutional models of macroprudential supervision show that it is provided either by central bank or by an independent body with a participation of central bank's officials. Considering the current challenges in Ukrainian financial system, the necessity of institutional reform of financial and macroprudential supervision is justified.

Suggested Citation

  • A. Shkliar, 2014. "Macroprudential regulation as an element of ensuring financial stability," Economy and Forecasting, Valeriy Heyets, issue 3, pages 32-40.
  • Handle: RePEc:eip:journl:y:2014:i:3:p:32-40
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    File URL: http://eip.org.ua/docs/EP_14_3_32_uk.pdf
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