Macroprudential Regulation

Francesca Diluiso, Barbara Annicchiarico and Marco Carli While climate change is often seen as a long-term concern, climate mitigation policies can have different short-term effects, since they affect the transmission mechanism of conventional macroeconomic shocks. In a new working paper, we show that cap-and-trade schemes lead to lower volatility in GDP and financial variables, and … Continue reading Beyond emissions: the interplay of macroprudential regulation and climate policy →

Álvaro Fernández-Gallardo, Simon Lloyd and Ed Manuel Since the 2007–09 Global Financial Crisis, central banks have developed a range of macroprudential policies (‘macropru’) to address fault lines in the financial system. A key aim of macropru is to reduce ‘left-tail risks‘ – ie, minimise the probability and severity of future economic crises. However, building this … Continue reading The transmission of macroprudential policy in the tails →

Kristin Forbes, Christian Friedrich and Dennis Reinhardt Recent episodes of financial stress, including the ‘dash for cash’ at the onset of the Covid-19 (Covid) pandemic, pressure in the UK’s liability-driven investment funds in 2022, and the collapse of Silicon Valley Bank in 2023, were stark reminders of the vulnerability of financial institutions to shocks that … Continue reading Funding structures and resilience to shocks after a decade of regulatory reform →

Naoto Takemoto, Simon Jurkatis and Nicholas Vause In less than two decades, the system of market-based finance (MBF) – which involves mainly non-bank financial institutions (NBFIs) providing credit to the economy through bonds rather than loans – has both mitigated and amplified the economic effects of financial crises. It mitigated effects after the global financial … Continue reading Strengthening the resilience of market-based finance →