Sentences with phrase «macroprudential tools»
"Macroprudential tools" refer to various measures or policies implemented by financial authorities or central banks to monitor and manage risks within the entire financial system rather than focusing on individual institutions. These tools aim to ensure stability, prevent potential threats, and strengthen the resilience of the overall economy against potential financial crises or imbalances. Full definition
Support for using macroprudential tools in the United States has also been bolstered by our experience during the financial crisis.
newyorkfed.org
The use of macroprudential tools has gotten considerable attention for several reasons.
Central banks should continue to normalize policy gradually and communicate clearly, while policymakers should address vulnerabilities by deploying and developing macroprudential tools.
There are also macroprudential tools — regulatory measures that can be used to promote not just the safety of an individual financial institution, but also that of the entire financial system.
Authorities could also, in principle, adjust macroprudential tools to dampen financial cycles — tightening them when leverage is building up and risk taking is increasing, and easing those requirements when that cycle turns.
Thus, the hope is that U.S. policymakers can learn from these international experiences and incorporate effective macroprudential tools into our toolkit that could be used to limit financial stability risks.
The limitations of macroprudential policies reflect the potential for risks to emerge outside sectors subject to regulation, the potential for supervision and regulation to miss emerging risks, the uncertain efficacy of new macroprudential tools such as a countercyclical capital buffer, and the potential for such policy steps to be delayed or to lack public support.14 Given such limitations, adjustments in monetary policy may, at times, be needed to curb risks to financial stability.15
A sound financial system also requires macroprudential tools to lean against credit cycles.
«Nonetheless, participants generally agreed that the Committee should not completely rule out the possibility of using monetary policy to address financial stability risks, particularly in circumstances in which such risks significantly threatened the achievement of its dual mandate and when macroprudential tools had been or were likely to be ineffective at mitigating those risks.»
Central banks should continue to normalize policy gradually and communicate clearly, while policymakers should address vulnerabilities by deploying and developing macroprudential tools.
This logic suggests that it is very important to have a public sector body with both the power and the paramount responsibility to use macroprudential tools to promote financial stability.
Second, policymakers must carefully monitor evolving risks to the financial system and be realistic about the ability of macroprudential tools to influence these developments.
«The best thing we can do is to support the transition of the Canadian economy and leave it to the authorities who have the macroprudential tools related to the housing market.»
Macroprudential tools are those that the federal government has deployed sporadically since the financial crisis to try to take the froth out of the housing market.
Macroprudential tools can be used in two ways.