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Enhancing macroprudential space when interest rates are “low for long”

Author

Listed:
  • Darracq Pariès, Matthieu
  • Kok, Christoffer
  • Rottner, Matthias

Abstract

Had authorities built up larger countercyclical buffers before the pandemic, it would have been easier to release capital in response to the crisis. The “lower for longer” interest rate environment reinforces the case for building up releasable buffers in good times. The article shows that enhancing countercyclical capacity can improve the policy mix available to achieve macro-financial stabilisation. JEL Classification: E32, E44, E52, E58, G21

Suggested Citation

  • Darracq Pariès, Matthieu & Kok, Christoffer & Rottner, Matthias, 2020. "Enhancing macroprudential space when interest rates are “low for long”," Macroprudential Bulletin, European Central Bank, vol. 11.
    • Handle: RePEc:ecb:ecbmbu:2020:0011:4
    Note: 604093
    as

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    File URL: https://www.ecb.europa.eu//pub/financial-stability/macroprudential-bulletin/html/ecb.mpbu202010_4~0cbde97c95.en.html
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    Citations

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    Cited by:

    1. Chavleishvili, Sulkhan & Fahr, Stephan & Kremer, Manfred & Manganelli, Simone & Schwaab, Bernd, 2021. "A risk management perspective on macroprudential policy," Working Paper Series 2556, European Central Bank.
    2. policy, Work stream on macroprudential & Policy, Monetary & Stability, Financial & Albertazzi, Ugo & Martin, Alberto & Assouan, Emmanuelle & Tristani, Oreste & Galati, Gabriele & Vlassopoulos, Thomas , 2023. "The role of financial stability considerations in monetary policy and the interaction with macroprudential policy in the euro area," Occasional Paper Series 272, European Central Bank.
    3. Cristina Jude & Grégory Levieuge, 2024. "Doubling Down: The Synergy of CCyB Release and Monetary Policy Easing," Working papers 961, Banque de France.
    4. policy, Work stream on macroprudential & Albertazzi, Ugo & Martin, Alberto & Assouan, Emmanuelle & Tristani, Oreste & Galati, Gabriele & Vlassopoulos, Thomas, 2021. "The role of financial stability considerations in monetary policy and the interaction with macroprudential policy in the euro area," Occasional Paper Series 272, European Central Bank.

    More about this item

    Keywords

    countercyclical capital buffer; macroprudential and monetary policy interaction; negative interest rates; releasable capital;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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