Macro-prudential policies

WHAT ARE MAKROPRUDENCIAL POLICIES AND WHICH INSTITUTION APPLIES THEM?

The macro-prudential policies are dedicated to the analysis and assessment of the systemic risk and include the implementation of measures for its prevention and mitigation. The macro-prudential policy is drafted and implemented by the macro-prudential authority of the country, which, depending on the structure of the financial system and the form of its supervision, may be the central bank or an inter-institutional forum representing several public authorities.

WHAT IS THE PURPOSE OF MAKROPRUDENCIAL POLICIES?

In practice, the purpose of macro-prudential measures is to prevent the transformation of a limited risk into a systemic risk, as well as to safeguard the rest of the system from the negative consequences in case of the failure of systemically-important institutions or banks. Macro-prudential policies aim to:

  • identify, monitor and assess the type and size of risks that threaten financial stability;
  • strengthen financial system capacities to avoid or cope with these risks with as little loss as possible.