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Macroprudential policy in a microprudential world

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Abstract

Events of the past decade have refocused attention on the potential contributions of monetary policy and macroprudential approaches to fostering financial stability. However, monetary policy is poorly suited for dealing with financial stability concerns. Instead, given the scarcity of explicit macroprudential tools in the United States, microprudential regulations and supervision are used to achieve macroprudential goals. The following is adapted from a presentation by the president and CEO of the Federal Reserve Bank of San Francisco to the Symposium on Asian Banking and Finance in Singapore May 28.

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  • John C. Williams, 2015. "Macroprudential policy in a microprudential world," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    • Handle: RePEc:fip:fedfel:00058
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    1. John C. Williams, 2014. "Financial stability and monetary policy: happy marriage or untenable union?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    2. Williams, John C., 2013. "A defense of moderation in monetary policy," Journal of Macroeconomics, Elsevier, vol. 38(PB), pages 137-150.
    3. Daniel Covitz & Nellie Liang & Tobias Adrian, 2015. "Financial Stability Monitoring," Annual Review of Financial Economics, Annual Reviews, vol. 7(1), pages 357-395, December.
    4. Kevin D. Sheedy, 2014. "Debt and Incomplete Financial Markets: A Case for Nominal GDP Targeting," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 45(1 (Spring), pages 301-373.
    5. Christopher Martin & C Milas, 2010. "Financial Stability and Monetary Policy," Department of Economics Working Papers 05/10, University of Bath, Department of Economics.
    6. Cochrane, John H., 2014. "Monetary policy with interest on reserves," Journal of Economic Dynamics and Control, Elsevier, vol. 49(C), pages 74-108.
    7. Svensson, Lars E.O., 2013. "Some Lessons from Six Years of Practical Inflation Targeting," CEPR Discussion Papers 9756, C.E.P.R. Discussion Papers.
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    Cited by:

    1. Rizwan, Muhammad Suhail, 2021. "Macroprudential regulations and systemic risk: Does the one-size-fits-all approach work?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 74(C).
    2. Grégory Levieuge, 2018. "La politique monétaire doit-elle être utilisée à des fins de stabilité financière ?," Revue française d'économie, Presses de Sciences-Po, vol. 0(3), pages 63-104.
    3. Friederike Niepmann & Tim Schmidt‐Eisenlohr & Emily Liu, 2021. "The effect of US stress tests on monetary policy spillovers to emerging markets," Review of International Economics, Wiley Blackwell, vol. 29(1), pages 165-194, February.
    4. Svensson, Lars E.O., 2017. "Leaning Against the Wind: Costs and Benefits, Effects on Debt, Leaning in DSGE Models, and a Framework for Comparison of Result," CEPR Discussion Papers 12226, C.E.P.R. Discussion Papers.
    5. Cecchetti, Stephen G., 2016. "On the separation of monetary and prudential policy: How much of the precrisis consensus remains?," Journal of International Money and Finance, Elsevier, vol. 66(C), pages 157-169.
    6. Svensson, Lars E.O., 2017. "Cost-benefit analysis of leaning against the wind," Journal of Monetary Economics, Elsevier, vol. 90(C), pages 193-213.
    7. Lars E. O. Svensson, 2018. "Monetary policy and macroprudential policy: Different and separate?," Canadian Journal of Economics, Canadian Economics Association, vol. 51(3), pages 802-827, August.
    8. Sahibzada, Irfan Ullah & Rizwan, Muhammad Suhail & Qureshi, Anum, 2022. "Impact of sovereign credit ratings on systemic risk and the moderating role of regulatory reforms: An international investigation," Journal of Banking & Finance, Elsevier, vol. 145(C).
    9. Muhammad Suhail Rizwan & Anum Qureshi & Irfan Ullah Sahibzada, 2024. "Macro-prudential regulations and systemic risk: the role of country-level governance indicators," Journal of Banking Regulation, Palgrave Macmillan, vol. 25(3), pages 305-325, September.
    10. Mr. Lars E. O. Svensson, 2016. "Cost-Benefit Analysis of Leaning Against the Wind: Are Costs Larger Also with Less Effective Macroprudential Policy?," IMF Working Papers 2016/003, International Monetary Fund.

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