Elements of effective macroprudential policies - lessons from international experience
Experience with macroprudential policy is growing. A large number of countries have put in place dedicated institutional arrangements. Progress is being made also with the design and implementation of macroprudential tools, and an increasing body of empirical research is available that evaluates the effectiveness of macroprudential policy.
Responding to an existing G20 mandate, this joint work takes stock of the experiences gained so far regarding elements and practices that can be useful for effective macroprudential policy making. It builds on the 2011 joint progress report to the G20 on macroprudential policy tools and frameworks (FSB/IMF/BIS 2011) and other IMF, FSB and BIS documents, taking into account more recent country and international institutions' experience as well as empirical evidence from academic and other studies.
While macroprudential policy tools have been in use in a number of emerging market economies well before the global financial crisis, their broader use is more recent and the establishment of dedicated macroprudential policy frameworks has often been prompted by the crisis experience. Accordingly, the experience gained in many countries does not yet span a full financial cycle, and lessons and empirical evidence based on that experience remain tentative. The wide range of institutional arrangements and policies being adopted across countries suggests that there is no "one-size-fits-all" approach. Nonetheless, accumulated experience highlights - and this paper documents - a number of elements that have been found useful for macroprudential policy making.