Publication: Macroprudential Policy Framework : A Practice Guide
Date
2014-04-29
ISSN
Published
2014-04-29
Author(s)
Krishnamurti, Damodaran
Lee, Yejin Carol
Abstract
This practice guide is primarily
intended as a reference and guidance for emerging market
economies in their migration to a formal macroprudential
policy framework. It relies largely on the existing wisdom,
knowledge, and experience and was written with the intention
of assisting policy makers (and the World Bank staff working
with these authorities) in the implementation of
macroprudential policy frameworks in jurisdictions with the
following characteristics representative of a typical
emerging market and developing economy: 1) a simple and
bank-dominated financial system where other financial sector
segments are much smaller, but growing; 2) banking
supervision function is within the central bank; 3)
financial sector regulation/supervision is not integrated;
4) uncertain availability of quality data. A macroprudential
policy framework is not a silver bullet for safeguarding
financial stability. It is also useful to highlight that a
macroprudential policy framework cannot take the place of
other public policy frameworks. While pursuing
macroprudential policy to build a more resilient financial
system, authorities should also take into consideration the
significant financial development needs that may exist in
their respective jurisdictions. This Practice Guide has been
structured in a logical sequence that mirrors
implementation. The second and third sections are laid out
to clarify and provide some context to the concept of a
macroprudential approach to supervision and discuss the
institutional framework. The fourth and fifth sections deal
with the operational aspects of macroprudential policy
framework that are timely detection of systemic risks using
early warning systems and addressing the buildup of systemic
risks with macroprudential policy instruments.
Citation
“Krishnamurti, Damodaran; Lee, Yejin Carol. 2014. Macroprudential Policy Framework : A Practice Guide. World Bank Study;. © Washington, DC: World Bank. http://openknowledge.worldbank.org/handle/10986/18152 License: CC BY 3.0 IGO.”