Important Policy Papers on Macroprudential Policy

Date Published 9/16/2013
Author Marja Hoek-Smit
Theme Housing Finance Policy

Important Policy Papers on Macroprudential Policy

September 16, 2013

The crisis has underscored the costs of systemic instability at both the national and the global levels and highlighted the need for dedicated macroprudential policies to achieve financial stability. The IMF has developed a series of papers that provide a framework to inform the IMF’s advice on macroprudential policy.

Importantly, one of the papers focuses on the countercyclical capital buffer (CCB). CCB was proposed by the Basel committee to increase the resilience of the banking sector to negative shocks. The interactions between banking sector losses and the real economy highlight the importance of building a capital buffer in periods when systemic risks are rising. Basel III introduces a framework for a time-varying capital buffer on top of the minimum capital requirement and another time-invariant buffer (the conservation buffer). The CCB aims to make banks more resilient against imbalances in credit markets and thereby enhance medium-term prospects of the economy—in good times when system-wide risks are growing, the regulators could impose the CCB which would help the banks to withstand losses in bad times. The paper draws on case studies from Ireland, Spain among others.


Key Aspects of Macroprudential Policy - Background Paper
Key Aspects of Macroprudential Policy
Implementing Macroprudential Policy - Selected Legal Issues

< Back to News