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Macroprudential policy in a currency union

Author

Listed:
  • Claudia M. Buch

    (Deutsche Bundesbank)

  • Benjamin Weigert

    (Deutsche Bundesbank)

Abstract

The past 20 years in Europe have seen large swings in real and financial markets, and sudden stops of capital flows have exposed the fault lines of the European financial architecture. While the pre-crisis financial architecture centered around mechanisms to contain borrowing by the public-sector, this paper argues that incentives for the private sector to engage in excessive borrowing had not been taken into account adequately. Macroprudential policy is a core element of the post-crisis reform agenda, and it plays a particularly important role in the European monetary union.

Suggested Citation

  • Claudia M. Buch & Benjamin Weigert, 2019. "Macroprudential policy in a currency union," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 155(1), pages 23-33, February.
    • Handle: RePEc:spr:weltar:v:155:y:2019:i:1:d:10.1007_s10290-018-0332-6
    DOI: 10.1007/s10290-018-0332-6
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    References listed on IDEAS

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    1. Christoph Schmidt & Benjamin Weigert, 2013. "Weathering the crisis and beyond: perspectives for the Euro area," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(4), pages 564-595, August.
    2. Carmen M. Reinhart & Kenneth S. Rogoff, 2014. "This Time is Different: A Panoramic View of Eight Centuries of Financial Crises," Annals of Economics and Finance, Society for AEF, vol. 15(2), pages 215-268, November.
    3. Silvia Merler, 2018. "Bank liquidation in the European Union- clarification needed," Policy Contributions 23603, Bruegel.
    4. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "Varieties of Crises and Their Dates," Introductory Chapters, in: This Time Is Different: Eight Centuries of Financial Folly, Princeton University Press.
    5. Òscar Jordà & Björn Richter & Moritz Schularick & Alan M Taylor, 2021. "Bank Capital Redux: Solvency, Liquidity, and Crisis," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 88(1), pages 260-286.
    6. Claudia M. Buch & Tobias Körner & Benjamin Weigert, 2015. "Towards Deeper Financial Integration in Europe: What the Banking Union Can Contribute," Credit and Capital Markets, Credit and Capital Markets, vol. 48(1), pages 11-49.
    7. Martin Hellwig, 2017. "Carving out legacy assets: a successful tool for bank restructuring?," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2017_03, Max Planck Institute for Research on Collective Goods.
    8. Martin F. Hellwig, 2018. "Valuation reports in the context of banking resolution: What are the challenges?," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2018_06, Max Planck Institute for Research on Collective Goods.
    9. Jay C. Shambaugh, 2012. "The Euro's Three Crises," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 43(1 (Spring), pages 157-231.
    10. Aikman, David & Haldane, Andrew & Hinterschweiger, Marc & Kapadia, Sujit, 2018. "Rethinking financial stability," Bank of England working papers 712, Bank of England.
    11. Philip R. Lane, 2012. "The European Sovereign Debt Crisis," Journal of Economic Perspectives, American Economic Association, vol. 26(3), pages 49-68, Summer.
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    Cited by:

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    2. Matthieu Bussière & Jin Cao & Jakob de Haan & Robert Hills & Simon Lloyd & Baptiste Meunier & Justine Pedrono & Dennis Reinhardt & Sonalika Sinha & Rhiannon Sowerbutts & Konstantin Styrin, 2021. "The interaction between macroprudential policy and monetary policy: Overview," Review of International Economics, Wiley Blackwell, vol. 29(1), pages 1-19, February.
    3. Agénor, Pierre-Richard & Jackson, Timothy & Jia, Pengfei, 2021. "Macroprudential policy coordination in a currency union," European Economic Review, Elsevier, vol. 137(C).
    4. Laura Alfaro & Paul R. Bergin, 2019. "Introduction to: the euro at twenty," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 155(1), pages 1-3, February.

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    More about this item

    Keywords

    Monetary union; EMU; Macroprudential policy; Monetary policy;
    All these keywords.

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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