Abstract

http://ssrn.com/abstract=1876595
 
 

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Macroprudential Policy: The Need for a Coherent Policy Framework


Dirk Schoenmaker


Duisenberg School of Finance; VU University Amsterdam

Peter Wierts


De Nederlandsche Bank - Research Department

July 1, 2011

Duisenburg School of Finance Policy Paper No. 13

Abstract:     
The recent literature on macroprudential policy contains several suggestions for possible instruments. This paper puts forward and implements a method for arriving at a coherent policy framework. It starts by defining the role of macroprudential policy in the overall policy framework for the monetary and financial system. It then specifies the objective, intermediate targets (pillars), instruments, decision-making, accountability, and the legal base. We introduce a two pillar strategy. The basic presumption is that each instrument should be related to its intermediate target (pillar). This allows us to select a limited set of core instruments aimed at stabilising financial imbalances (pillar 1) and addressing externalities that arise from interconnections in the financial system (pillar 2).

Number of Pages in PDF File: 21

Keywords: Macroprudential policy, monetary policy, financial stability, financial supervision, policy frameworks

JEL Classification: E44, E58, E61, G28

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Date posted: July 3, 2011  

Suggested Citation

Schoenmaker, Dirk and Wierts, Peter, Macroprudential Policy: The Need for a Coherent Policy Framework (July 1, 2011). Duisenburg School of Finance Policy Paper No. 13. Available at SSRN: http://ssrn.com/abstract=1876595 or http://dx.doi.org/10.2139/ssrn.1876595

Contact Information

Dirk Schoenmaker (Contact Author)
Duisenberg School of Finance ( email )
Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands
+31205258580 (Phone)
HOME PAGE: http://www.dsf.nl
VU University Amsterdam ( email )
De Boelelaan 1105
Amsterdam, 1081 HV
Netherlands
Peter Wierts
De Nederlandsche Bank - Research Department ( email )
P.O. Box 98
1000 AB Amsterdam
Netherlands

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