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Effects Of Monetary And Macroprudential Policies On Financial Conditions
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Book Synopsis Effects of Monetary and Macroprudential Policies on Financial Conditions by : Ms.Aleksandra Zdzienicka
Download or read book Effects of Monetary and Macroprudential Policies on Financial Conditions written by Ms.Aleksandra Zdzienicka and published by International Monetary Fund. This book was released on 2015-12-31 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Global Financial Crisis has reopened discussions on the role of the monetary policy in preserving financial stability. Determining whether monetary policy affects financial variables domestically—especially compared to the effects of macroprudential policies— and across borders, is crucial in this context. This paper looks into these issues using U.S. exogenous monetary policy shocks and macroprudential policy measures. Estimates indicate that monetary policy shocks have significant and persistent effects on financial conditions and can attenuate long-term financial instability. In contrast, the impact of macroprudential policy measures is generally more immediate but shorter-lasting. Also, while an exogenous increase in U.S. monetary policy rates tends to reduce credit and house prices in other countries—with the effects varying with country-specific characteristics—an increase driven by improved U.S. economic conditions tends to have the opposite effect. Finally, we do not find evidence of cross-border spillover effects associated with U.S. macroprudential policies.
Book Synopsis Effects of Monetary and Macroprudential Policies on Financial Conditions by : Aleksandra Zdzienicka (Ms)
Download or read book Effects of Monetary and Macroprudential Policies on Financial Conditions written by Aleksandra Zdzienicka (Ms) and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Key Aspects of Macroprudential Policy - Background Paper by : International Monetary Fund. Fiscal Affairs Dept.
Download or read book Key Aspects of Macroprudential Policy - Background Paper written by International Monetary Fund. Fiscal Affairs Dept. and published by International Monetary Fund. This book was released on 2013-10-06 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt: The countercyclical capital buffer (CCB) was proposed by the Basel committee to increase the resilience of the banking sector to negative shocks. The interactions between banking sector losses and the real economy highlight the importance of building a capital buffer in periods when systemic risks are rising. Basel III introduces a framework for a time-varying capital buffer on top of the minimum capital requirement and another time-invariant buffer (the conservation buffer). The CCB aims to make banks more resilient against imbalances in credit markets and thereby enhance medium-term prospects of the economy—in good times when system-wide risks are growing, the regulators could impose the CCB which would help the banks to withstand losses in bad times.
Author :International Monetary Fund. Monetary and Capital Markets Department Publisher :International Monetary Fund ISBN 13 :1498339514 Total Pages :68 pages Book Rating :4.4/5 (983 download)
Book Synopsis The Interaction of Monetary and Macroprudential Policies - Background Paper by : International Monetary Fund. Monetary and Capital Markets Department
Download or read book The Interaction of Monetary and Macroprudential Policies - Background Paper written by International Monetary Fund. Monetary and Capital Markets Department and published by International Monetary Fund. This book was released on 2012-12-27 with total page 68 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides background material to support the Board paper on the interaction of monetary and macroprudential policies. It analyzes the scope for and evidence on interactions between monetary and macroprudential policies. It first reviews a recent conceptual literature on interactive effects that arise when both macroprudential and monetary policy are employed. It goes on to explore the “side effects” of monetary policy on financial stability and their implications for macroprudential policy. It finally addresses the strength of possible effects of macroprudential policies on output and price stability, and draws out implications for the conduct of monetary policy.
Book Synopsis Monetary and Macroprudential Policies to Manage Capital Flows by : Juan Pablo Medina Guzman
Download or read book Monetary and Macroprudential Policies to Manage Capital Flows written by Juan Pablo Medina Guzman and published by International Monetary Fund. This book was released on 2014-02-12 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study interactions between monetary and macroprudential policies in a model with nominal and financial frictions. The latter derive from a financial sector that provides credit and liquidity services that lead to a financial accelerator-cum-fire-sales amplification mechanism. In response to fluctuations in world interest rates, inflation targeting dominates standard Taylor rules, but leads to increased volatility in credit and asset prices. The use of a countercyclical macroprudential instrument in addition to the policy rate improves welfare and has important implications for the conduct of monetary policy. “Leaning against the wind” or augmenting a standard Taylor rule with an argument on credit growth may not be an effective policy response.
Book Synopsis Drivers of Financial Access: the Role of Macroprudential Policies by : Corinne Deléchat
Download or read book Drivers of Financial Access: the Role of Macroprudential Policies written by Corinne Deléchat and published by International Monetary Fund. This book was released on 2020-05-29 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study analyzes the drivers of the use of formal vs. informal financial services in emerging and developing countries using the 2017 Global FINDEX data. In particular, we investigate whether individuals’ choice of financial services correlates with macro-financial and macro-structural policies and conditions, in addition to individual and country characteristics. We start our analysis on middle and low-income countries, and then zoom in on sub-Saharan Africa, currently the region that most relies on informal financial services, and which has the largest uptake of mobile banking. We find robust evidence of an association between macroprudential policies and individuals’ choice of financial access after controlling for personal and country-level characteristics. In particular, macroprudential policies aimed at controlling credit supply seem to be associated with greater resort to informal financial services compared with formal, bank-based access. This highlights the importance for central bankers and financial sector regulators to consider the potential spillovers of monetary policy and financial stability measures on financial inclusion.
Book Synopsis Staff Guidance Note on Macroprudential Policy by : International Monetary Fund
Download or read book Staff Guidance Note on Macroprudential Policy written by International Monetary Fund and published by International Monetary Fund. This book was released on 2014-06-11 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: This note provides guidance to facilitate the staff’s advice on macroprudential policy in Fund surveillance. It elaborates on the principles set out in the “Key Aspects of Macroprudential Policy,” taking into account the work of international standard setters as well as the evolving country experience with macroprudential policy. The main note is accompanied by supplements offering Detailed Guidance on Instruments and Considerations for Low Income Countries
Book Synopsis Optimal Monetary and Macroprudential Policies Under Fire-Sale Externalities by : Flora Lutz
Download or read book Optimal Monetary and Macroprudential Policies Under Fire-Sale Externalities written by Flora Lutz and published by International Monetary Fund. This book was released on 2023-03-10 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: I provide an integrated analysis of monetary and macroprudential policies in a model economy featuring a financial friction and a nominal wage rigidity. In this set-up, the monetary authority faces a trade-off between macroeconomic and financial stability: While expansionary counter-cyclical monetary policy prevents involuntary unemployment, it also amplifies an inefficient reallocation of capital across sectors. The main contribution of the analysis is threefold: First it highlights a novel channel through which monetary policy can impact financial stability. Second, it shows that, by itself, monetary policy can significantly mitigate the wedge between the constrained efficient and the competitive allocation. Third, regardless of the availability of macroprudential tools, stabilizing demand is usually not optimal for monetary policy.
Book Synopsis Effects of Macroprudential Policy: Evidence from Over 6,000 Estimates by : Juliana Dutra Araujo
Download or read book Effects of Macroprudential Policy: Evidence from Over 6,000 Estimates written by Juliana Dutra Araujo and published by International Monetary Fund. This book was released on 2020-05-22 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper builds a novel database on the effects of macroprudential policy drawing from 58 empirical studies, comprising over 6,000 results on a wide range of instruments and outcome variables. It encompasses information on statistical significance, standardized magnitudes, and other characteristics of the estimates. Using meta-analysis techniques, the paper estimates average effects to find i) statistically significant effects on credit, but with considerable heterogeneity across instruments; ii) weaker and more imprecise effects on house prices; iii) quantitatively stronger effects in emerging markets and among studies using micro-level data; and iii) statistically significant evidence of leakages and spillovers. Other findings include relatively stronger impacts for tightening than loosening actions and negative effects on economic activity in the near term.
Book Synopsis Loose Financial Conditions, Rising Leverage, and Risks to Macro-Financial Stability by : Mr. Adolfo Barajas
Download or read book Loose Financial Conditions, Rising Leverage, and Risks to Macro-Financial Stability written by Mr. Adolfo Barajas and published by International Monetary Fund. This book was released on 2021-08-20 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: After a steady increase following the global financial crisis, private nonfinancial sector leverage rose further during the COVID-19 on the back of easy financial conditions induced by unprecedented policy support. We investigate the empirical relationships between increased leverage, financial conditions, and macro-financial stability in a sample of major advanced and emerging market economies. We find that loose financial conditions contribute to leverage buildups and generate an intertemporal tradeoff: financial stability risk is lessened in the near term but exacerbated in the medium term. The tradeoff is amplified during credit booms, when debt service burdens are particularly high, or when the share of foreign currency debt is high in emerging markets. Selected macroprudential tools can arrest leverage buildups and mitigate the tradeoff.
Book Synopsis The Micro Impact of Macroprudential Policies: Firm-Level Evidence by : Meghana Ayyagari
Download or read book The Micro Impact of Macroprudential Policies: Firm-Level Evidence written by Meghana Ayyagari and published by International Monetary Fund. This book was released on 2018-12-07 with total page 65 pages. Available in PDF, EPUB and Kindle. Book excerpt: Combining balance sheet data on 900,000 firms from 48 countries with information on the adoption of macroprudential policies during 2003-2011, we find that these policies are associated with lower credit growth. These effects are especially significant for micro, small and medium enterprises (MSMEs) and young firms that, according to the literature, are more financially constrained and bank dependent. Among MSMEs and young firms, those with weaker balance sheets exhibit lower credit growth in conjunction with the adoption of macroprudential policies, suggesting that these policies can enhance financial stability. Finally, our results show that macroprudential policies have real effects, as they are associated with lower investment and sales growth.
Book Synopsis Will Macroprudential Policy Counteract Monetary Policy’s Effects on Financial Stability? by : Mr. Itai Agur
Download or read book Will Macroprudential Policy Counteract Monetary Policy’s Effects on Financial Stability? written by Mr. Itai Agur and published by International Monetary Fund. This book was released on 2015-12-29 with total page 23 pages. Available in PDF, EPUB and Kindle. Book excerpt: How does monetary policy impact upon macroprudential regulation? This paper models monetary policy's transmission to bank risk taking, and its interaction with a regulator's optimization problem. The regulator uses its macroprudential tool, a leverage ratio, to maintain financial stability, while taking account of the impact on credit provision. A change in the monetary policy rate tilts the regulator's entire trade-off. We show that the regulator allows interest rate changes to partly "pass through" to bank soundness by not neutralizing the risk-taking channel of monetary policy. Thus, monetary policy affects financial stability, even in the presence of macroprudential regulation.
Book Synopsis Macroprudential Policy Effects by : Nina Biljanovska
Download or read book Macroprudential Policy Effects written by Nina Biljanovska and published by International Monetary Fund. This book was released on 2023-03-31 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: The global financial crisis (GFC) underscored the need for additional policy tools to safeguard financial stability and ultimately macroeconomic stability. Systemic financial vulnerabilities had developed under a seemingly tranquil macroeconomic surface of low inflation and small output gaps. This challenged the precrisis view that achieving these traditional policy targets was a sufficient condition for macroeconomic stability. Thus, new tools had to be deployed to target specific financial vulnerabilities and to build buffers to cushion adverse aggregate shocks, while allowing traditional policy levers, including monetary and microprudential policies to focus on their traditional roles. Macroprudential policy measures emerged as the solution to this gap. Some of these measures had been used before the GFC (mostly in emerging markets). But it was only after the crisis that they were more widely adopted, and the toolkit expanded. This spurred a growing body of empirical research on the effects and potential shortfalls of these measures, with a further deepening of this knowledge gaining importance as policymakers confront increased financial stability risks in the post-pandemic world. Recognizing that there still is much to learn, this paper takes stock of our expanding understanding about the effects (and side effects) of macroprudential measures by focusing on these questions: What have we learned about the effects of macroprudential policy in containing the buildup of vulnerabilities? What do we know about the effects on economic activity and resilience? How do policy effects vary with conditions and over time? How important are leakages and circumvention? How do the effects on credit depend on other policies?
Book Synopsis Monetary and Macroprudential Policy Coordination Among Multiple Equilibria by : Mr.Itai Agur
Download or read book Monetary and Macroprudential Policy Coordination Among Multiple Equilibria written by Mr.Itai Agur and published by International Monetary Fund. This book was released on 2018-11-02 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: The notion of a tradeoff between output and financial stabilization is based on monetary-macroprudential models with unique equilibria. Using a game theory setup, this paper shows that multiple equilibria lead to qualitatively different results. Monetary and macroprudential authorities have tools that impose externalities on each other's objectives. One of the tools (macroprudential) is coarse, while the other (monetary policy) is unconstrained. We find that this asymmetry always leads to multiple equilibria, and show that under economically relevant conditions the authorities prefer different equilibria. Giving the unconstrained authority a weight on "helping" the constrained authority ("leaning against the wind") now has unexpected effects. The relation between this weight and the difficulty of coordinating is hump-shaped, and therefore a small degree of leaning worsens outcomes on both authorities' objectives.
Author :International Monetary Fund. Monetary and Capital Markets Department Publisher :International Monetary Fund ISBN 13 :1498339506 Total Pages :36 pages Book Rating :4.4/5 (983 download)
Book Synopsis The Interaction of Monetary and Macroprudential Policies by : International Monetary Fund. Monetary and Capital Markets Department
Download or read book The Interaction of Monetary and Macroprudential Policies written by International Monetary Fund. Monetary and Capital Markets Department and published by International Monetary Fund. This book was released on 2012-12-29 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: The recent crisis showed that price stability does not guarantee macroeconomic stability. In several countries, dangerous financial imbalances developed under low inflation and small output gaps. To ensure macroeconomic stability, policy has to include financial stability as an additional objective. But a new objective demands new tools: macroprudential tools that can target specific sources of financial imbalances (something monetary policy is not well suited to do). Effective macroprudential policies (which include a range of constraints on leverage and the composition of balance sheets) could then contain risks ex ante and help build buffers to absorb shocks ex post.
Author :International Monetary Fund. Monetary and Capital Markets Department Publisher :International Monetary Fund ISBN 13 :1498339174 Total Pages :33 pages Book Rating :4.4/5 (983 download)
Book Synopsis Macroprudential Policy - An Organizing Framework - Background Paper by : International Monetary Fund. Monetary and Capital Markets Department
Download or read book Macroprudential Policy - An Organizing Framework - Background Paper written by International Monetary Fund. Monetary and Capital Markets Department and published by International Monetary Fund. This book was released on 2011-03-14 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: MCM conducted a survey in December 2010 to take stock of international experiences with financial stability and the evolving macroprudential policy framework. The survey was designed to seek information in three broad areas: the institutional setup for macroprudential policy, the analytical approach to systemic risk monitoring, and the macroprudential policy toolkit. The survey was sent to 63 countries and the European Central Bank (ECB), including all countries in the G-20 and those subject to mandatory Financial Sector Assessment Programs (FSAPs). The target list is designed to cover a broad range of jurisdictions in all regions, but more weight is given to economies that are systemically important (see Annex for details). The response rate is 80 percent. This note provides a summary of the survey’s main findings.
Book Synopsis Capital Flows, Financial Intermediation and Macroprudential Policies by : Matteo Ghilardi
Download or read book Capital Flows, Financial Intermediation and Macroprudential Policies written by Matteo Ghilardi and published by International Monetary Fund. This book was released on 2014-08-21 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper develops an open-economy DSGE model with an optimizing banking sector to assess the role of capital flows, macro-financial linkages, and macroprudential policies in emerging Asia. The key result is that macro-prudential measures can usefully complement monetary policy. Countercyclical macroprudential polices can help reduce macroeconomic volatility and enhance welfare. The results also demonstrate the importance of capital flows and financial stability for business cycle fluctuations as well as the role of supply side financial accelerator effects in the amplification and propagation of shocks.
