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The changing role of macroprudential policy in Austria after World War II

Author

Listed:
  • Sophia Döme
  • Stefan W. Schmitz

    (Oesterreichische Nationalbank)

  • Katharina Steiner

    (Oesterreichische Nationalbank, Foreign Research Division)

  • Eva Ubl

    (Oesterreichische Nationalbank, Financial Markets Analysis and Surveillance Division)

Abstract

The need for and implementation of macroprudential supervision was a key lesson from the global financial crisis of 2008. However, historical protocols, legislation, policy agreements as well as the literature bear witness of a longer history of macroprudential policy in Austria: it predates the crisis by about 60 years during which it gradually evolved. We argue that careful analysis of this history provides interesting insights for current policymakers. We identify the following key lessons from analyzing the changing legal nature, motivation and effectiveness of macroprudential policy in Austria: first, macroprudential policy requires a sound legal basis; second, measures have to be quite intrusive to effectively curtail the build-up of systemic risk. Less intrusive measures become effective above all by increasing the shock-absorbing capacity of the financial system, once systemic risks materialize.

Suggested Citation

  • Sophia Döme & Stefan W. Schmitz & Katharina Steiner & Eva Ubl, 2016. "The changing role of macroprudential policy in Austria after World War II," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 163-189.
    • Handle: RePEc:onb:oenbmp:y:2016:i:3:b:8
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    References listed on IDEAS

    as
    1. Judith Eidenberger & David Liebeg & Stefan W. Schmitz & Reinhardt Seliger & Michael Sigmund & Katharina Steiner & Peter Strobl & Eva Ubl, 2014. "Macroprudential Supervision: A Key Lesson from the Financial Crisis," Financial Stability Report, Oesterreichische Nationalbank (Austrian Central Bank), issue 27, pages 83-94.
    2. Gunther Tichy, 1965. "Die Entwicklung der organisierten Kreditmärkte," WIFO Monatsberichte (monthly reports), WIFO, vol. 38(4), pages 132-137, April.
    3. Gabriele Galati & Richhild Moessner, 2013. "Macroprudential Policy – A Literature Review," Journal of Economic Surveys, Wiley Blackwell, vol. 27(5), pages 846-878, December.
    4. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    5. Emanuel Kopp & Christian Ragacs & Stefan W. Schmitz, 2010. "The Economic Impact of Measures Aimed at Strengthening Bank Resilience – Estimates for Austria," Financial Stability Report, Oesterreichische Nationalbank (Austrian Central Bank), issue 20, pages 86-114.
    6. Mr. Karl F Habermeier & Annamaria Kokenyne & Chikako Baba, 2011. "The Effectiveness of Capital Controls and Prudential Policies in Managing Large Inflows," IMF Staff Discussion Notes 2011/014, International Monetary Fund.
    7. Kelber, A. & Monnet, E., 2014. "Macroprudential policy and quantitative instruments: a European historical perspective," Financial Stability Review, Banque de France, issue 18, pages 151-160, April.
    8. Carmen M. Reinhart & Graciela L. Kaminsky, 1999. "The Twin Crises: The Causes of Banking and Balance-of-Payments Problems," American Economic Review, American Economic Association, vol. 89(3), pages 473-500, June.
    9. T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
    10. repec:onb:oenbwp:y:2012:i:24:b:1 is not listed on IDEAS
    11. William Dudley, 2015. "Is the active use of macroprudential tools institutionally realistic?," Speech 180, Federal Reserve Bank of New York.
    12. Raphael Auer & Sebastien Kraenzlin & David Liebeg, 2012. "How Do Austrian Banks Fund Their Swiss Franc Exposure?," Financial Stability Report, Oesterreichische Nationalbank (Austrian Central Bank), issue 24, pages 54-61.
    13. Charles Goodhart, 1989. "Money, Information and Uncertainty: 2nd Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262071223, December.
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    Cited by:

    1. Stefan W. Schmitz, 2016. "The OeNB’s reaction to the end of the Bretton Woods system: tracing the roots of the Indicator," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 190-210.
    2. Michael Sigmund, 2021. "Assessing macro-prudential policies: the case of FX lending," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 45(2), pages 316-359, April.
    3. Andreas Greiner & Katharina Steiner & Walter Waschiczek, 2019. "The recent upswing in corporate loan growth in Austria – a first risk assessment," Financial Stability Report, Oesterreichische Nationalbank (Austrian Central Bank), issue 38, pages 56-73.
    4. Michaela Posch & Stefan W. Schmitz & Katharina Steiner & Eva Ubl, 2019. "The case for macroprudential policy as a stabilizing tool for the euro area," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue Q1-Q2/19, pages 124-138.

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    Keywords

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    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • N24 - Economic History - - Financial Markets and Institutions - - - Europe: 1913-

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