Macroprudential Policy Framework: A Practice Guide

Macroprudential Policy Framework: A Practice Guide

by Damodaran Krishnamurti, Yejin Carol Lee


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Product Details

ISBN-13: 9781464800856
Publisher: World Bank Publications
Publication date: 02/11/2014
Series: World Bank Studies
Pages: 61
Product dimensions: 7.00(w) x 10.00(h) x 0.15(d)

Table of Contents

Acknowledgments vii

Abbreviations ix

Chapter 1 Introduction 1

Chapter 2 Macroprudential Approach to Supervision 3

The Term Macroprudential 3

Scope and Objective 5

Chapter 3 Institutional Framework 9

Mandate and Powers 9

Institutional Structure 10

Governance Arrangements 14

Notes 18

Chapter 4 Early Warning Systems 19

Perimeter of Surveillance 19

Early Detection of Systemic Risk 20

Early Warning Indicators 21

Thresholds and Triggers for Risk Indicators 26

Communication 27

Challenges to Successful Implementation of the Early Warning System 28

Chapter 5 Macroprudential Policy Options 31

Overview 31

Past Use of Macroprudential Instruments and Recent Trends 32

How to Use Macroprudential Policy Instruments 34

Challenges to Successful Implementation of Macroprudential Policy 36

Chapter 6 Conclusion 41

Appendix A Quick Reference Guide: For Implementation of a Macroprudential Policy Framework 45

Appendix B Stability Indicators and Maps: Example from India 49

Appendix C Macroprudential Policy Instruments: A Toolkit 51

References and Further Reading 59


2.1 Fallacy of Composition: How Individually Acceptable Behavior Can Contribute to Macroprudential Concerns 6

3.1 Key Desirables for Macroprudential Policy Arrangements 17

4.1 Data and Information Gaps 29

5.1 Basel III: The Foundation for a Macroprudential Framework 33

6.1 Broad Principles for the Design and Operation of Macroprudential Policy 41


3.1 Central Bank Board as Macroprudential Authority 13

3.2 Committee Structure as Macroprudential Authority 13

4.1 Example of a Heat Map at an Aggregate Level 27


2.1 The Macro- and Microprudential Perspectives Compared 5

3.1 Which Institution Has Been Given the Macroprudential Mandate? 12

4.1 A Menu of Early Warning Indicators 24

4.2 Possible Layout for a Risk Dashboard 26

5.1 Experience with Macroprudential Tools in Asia 32

5.2 Macroprudential Policy Instruments-Summary 35

5.3 How to Use Macroprudential Instruments-Some Considerations 37

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