Politicians, central banks and macroprudential supervision

Policymakers must address a series of possible trade-offs between the expected benefits and costs of allowing the central bank to have more or less influence on macroprudential strategies. Consequently, the political economy perspective becomes relevant. The aim of this chapter is to illustrate how theoretical and empirical analyses can shed light on the political drivers that in both normal and extraordinary times might explain the central bank's involvement as a supervisor. Given the theoretical background, these drivers are analysed using a cross-country perspective; then, adding a temporal dimension, the possible role of macroeconomic crises is discussed.