The Interaction of Monetary and Macroprudential Policies

The recent crisis showed that price stability does not guarantee macroeconomic stability.

Volume/Issue: Volume 2012 Issue 107

Publication date:

ISBN:

Add to Cart by clicking price of the language and format you'd like to purchase

Available Languages and Formats

Topics covered in this book

This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Banks and Banking , Finance , Economics- Macroeconomics , PP , monetary policy , policy , interest rate , exchange rate , price , policy coordination , responses to shock , policy strategy , monetary policy stance , policy horizon , A , policy goal , policy dilemma , asset price , price stability , policy rate , monetary policy's effectiveness , Macroprudential policy , Financial sector stability , Macroprudential policy instruments , Price stabilization , Central bank policy rate , Europe , Eastern Europe , Global

Also of interest

Review of Implementation of IMF Commitments in Support of the 2030 Agenda for...

2018 Review of Program Design and Conditionality

Implementing Board-Endorsed Recommendations From The 2024 External Evaluation...

The Global Financial Safety Net—A Stocktaking

Summary

The recent crisis showed that price stability does not guarantee macroeconomic stability. In several countries, dangerous financial imbalances developed under low inflation and small output gaps. To ensure macroeconomic stability, policy has to include financial stability as an additional objective. But a new objective demands new tools: macroprudential tools that can target specific sources of financial imbalances (something monetary policy is not well suited to do). Effective macroprudential policies (which include a range of constraints on leverage and the composition of balance sheets) could then contain risks ex ante and help build buffers to absorb shocks ex post.