Cross-Border Spillover Effects of Macroprudential Policies: A Conceptual Framework

Abstract

Due to the international dimension of the financial sector within the EU and beyond, domestically oriented macroprudential policies have the potential to create material cross-border spillover effects. This occasional paper provides a detailed overview of the academic and empirical literature on cross-border effects of macroprudential policies. It also summarises a stocktaking exercise, conducted by a task force of the ESCB’s Financial Stability Committee (FSC), on existing national approaches within the EU for assessing and monitoring such cross-border spillover effects. The paper accompanies an FSC report presenting a framework to be used by macroprudential authorities when assessing cross-border spillover effects induced by enacted or planned policy measures.

Keywords: banking union, cross-border spillovers, European Central Bank, financial stability, macroprudential policies, systemic risks

JEL Classification: E42, E58, F36, G21