The Macroprudential Policy Framework Needs to Be Global

Abstract

Basell III was a direct answer to the 2008 financial crisis. Now 10 years after the crisis, it is time to assess its timeliness and make the necessary adjustments so it becomes truly global. In this policy brief, we first clarify the goals of macroprudential policy before highlighting the main challenges that home and host countries may run into when global financial institutions lend beyond their home countries. We then suggest to focus on four priorities to address these vulnerabilities: (i) An adaptable and flexible global framework, (ii) The generalization of international standards and best practices, (iii) A stronger global data depository, (iv) Regulatory and monitoring cooperation.

Keywords: macroprudential policy, financial system resilience, G20

JEL Classification: E6, F5, F6, G