Prudential policy after the pandemic

Speech by Mr Fernando Restoy, Chairman, Financial Stability Institute, Bank for International Settlements, at the 33rd Annual Conference of the Group of Banking Supervisors from Central and Eastern Europe, Astana, Kazakhstan, 27 May 2021.

After the Covid-19 outbreak regulators have explicitly accepted, probably for the first time, an explicit macro-stabilisation role. Yet the Covid-19 crisis has shown just how challenging that task is in practice. From a supervisory viewpoint, it is a challenge to keep up an effective oversight of banks and address pockets of vulnerability while maintaining a supportive macroprudential stance. Adjustments in regulation – particularly to strengthen macroprudential frameworks – may help to address those challenges by providing authorities with more and better tools. Yet regulatory adjustments can only take place once sufficient evidence is on hand for the issues that need to be tackled, so that a thorough analysis can be performed.