Abstract

http://ssrn.com/abstract=2208643
 
 

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Implementing a Macroprudential Framework: Blending Boldness and Realism


Claudio E. V. Borio


Bank for International Settlements (BIS) - Research and Policy Analysis


Capitalism and Society, Vol. 6, Issue 1, Article 1, 2011

Abstract:     
There is now a broad consensus in the policy community that strengthening the macroprudential orientation of regulatory and supervisory frameworks is essential for the promotion of financial stability. The window of opportunity to put in place fully fledged macroprudential frameworks should not be missed. Meeting this challenge calls for a finely balanced blend of boldness and realism. Boldness is required to face the hard design questions head-on; realism to avoid overreach and to manage expectations. Policymakers should be as ambitious as possible, but no more. In all this, research has an important role to play in allowing the framework to grow at a pace commensurate with our knowledge. This speech considers how to strike the balance between boldness and realism in several aspects of the framework: in the criterion for judging its success; in how closely systemic risk should be tracked; in the mix between an aggregate and a sectoral approach; in that between rules and discretion; and in governance arrangements. It also highlights some key questions for research.

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Number of Pages in PDF File: 25

Keywords: macroprudential, microprudential, systemic risk, regulation and supervision

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Date posted: January 29, 2013  

Suggested Citation

Borio, Claudio E. V., Implementing a Macroprudential Framework: Blending Boldness and Realism. Capitalism and Society, Vol. 6, Issue 1, Article 1, 2011. Available at SSRN: http://ssrn.com/abstract=2208643

Contact Information

Claudio E.V. Borio (Contact Author)
Bank for International Settlements (BIS) - Research and Policy Analysis ( email )
CH-4002 Basel, Basel-Stadt
Switzerland
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