Seven don'ts and one hope: The nexus between prudential and monetary policies
Speech by Mr Claudio Borio, Head of the Monetary and Economic Department of the BIS, at the SUERF-Deutsche Bundesbank-IMFS Conference on "SSM at 1", Frankfurt, 3-4 February 2016.
Abstract
In the hope of edging closer to taming the financial cycle, this presentation puts forward seven suggested "don'ts": don't oversimplify the distinction between micro- and macroprudential policy; don't underestimate the role of capital as the basis for lending; don't set overly ambitious goals for macroprudential frameworks during busts; don't regard the length of the financial cycle as a reason to forget monetary policy; don't overlook the impact of the financial cycle on productivity growth; don't think of a financial stability-oriented monetary policy simply as "leaning-against-the wind"; don't presume that even monetary and prudential policies combined can tame the financial cycle.
- Presentation slides (18 pages, 707 kb)