Template-Type: ReDIF-Paper 1.0
Author-Name: Claudio Borio 
Author-X-Name-First: Claudio 
Author-X-Name-Last: Borio 
Author-Name: Ilhyock Shim 
Author-X-Name-First: Ilhyock  
Author-X-Name-Last: Shim
Author-Name: Hyun Song Shin 
Author-X-Name-First: Hyun
Author-X-Name-Last: Song Shin 
Title: Macro-financial stability frameworks: experience and challenges
Abstract: Since the 2008–9 Great Financial Crisis, major advanced economies (AEs) have used monetary and macroprudential policies to achieve macroeconomic and financial stability. Emerging market economies (EMEs) have, in addition, combined interest rate tools with FX intervention, macroprudential policy and, sometimes, capital flow management measures (CFMs) to address the challenges from capital flow and exchange rate volatility. This paper provides an overview of the use of monetary, macroprudential and exchange rate policies, sometimes alongside CFMs, both in AEs and EMEs. It also assesses the extent to which the use of these policies constitutes a holistic macro-financial stability framework (MFSF). We reach three conclusions. First, combining tools has succeeded in improving policy trade-offs, notably by mitigating the risks to domestic stability arising from external influences. Second, a holistic MFSF is still a work in progress. Finally, more efforts need to be made to better understand the channels of international spillovers and spillbacks.
Length: 38 pages
Creation-Date: 2022-12
File-URL: https://www.bis.org/publ/work1057.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work1057.htm
File-Format: text/html
Number: 1057
Keywords: capital flow, exchange rate policy, macro-financial stability framework, macroprudential measure, monetary policy 
Classification-JEL: E44, E52, F38, G28
Handle: RePEc:bis:biswps:1057