Micro policies and turbulence in asset markets

8 January 2003

Press release

The Contact Group on Asset Prices today released the report Turbulence in asset markets: the role of micro policies. The report explores how micro policy measures can reduce the risks of excessive and potentially destabilising asset price movements and their impact on real stability.

Micro policies covered in the report include taxes and such aspects of regulation as dynamic provisioning and fair value accounting in the banking industry. Property taxes, interest deductibility and transaction taxes are seen as potentially impinging upon asset market prices. The implication is that awareness of the role of these policies and greater transparency can lead market participants to make more informed assessments and reduce the incidence of such phenomena as disaster myopia and herd behaviour.

The Contact Group's report draws on case studies and a survey covering industrial countries for which the link between micro policies and equity and property prices was assumed to be important. It served as background for discussion among G10 Ministers and Governors in September 2002.

Note to editors

The Contact Group on Asset Prices was established in April 2001 and comprises the central banks of Australia, Belgium, Canada, Germany, Hong Kong SAR, Ireland, Japan, the Netherlands, Spain, Sweden, Switzerland and the United Kingdom. The other G10 participants also contributed to the report. The Contact Group, which was chaired by Mr Lars Heikensten of Sveriges Riksbank, released the report in its own name.