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Marrying Monetary Policy with Macroprudential Regulation: Exploration of Issues

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  • Don Nakornthab Phurichai
  • Rungcharoenkitkul

Abstract

Since the eruption of the global financial crisis in 2008, macroprudential regulation has become a mantra in the regulatory world. The soon-to-be-widespread adoption of macroprudential tools will inevitably affect the dynamics of the economy and consequently have a direct bearing on the conduct of monetary policy. This paper explores theoretically several issues surrounding the interplay between macroprudential regulation and monetary policy. Among the key issues examined are the economic stabilization role of rule-based macroprudential policy, the implications of a countercyclical capital requirement on the monetary transmission mechanism, and the optimal policy combination.

Suggested Citation

  • Don Nakornthab Phurichai & Rungcharoenkitkul, 2010. "Marrying Monetary Policy with Macroprudential Regulation: Exploration of Issues," Occasional Papers, South East Asian Central Banks (SEACEN) Research and Training Centre, number occ49, April.
    • Handle: RePEc:sea:opaper:occ49
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    References listed on IDEAS

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    1. Mr. Papa M N'Diaye, 2009. "Countercyclical Macro Prudential Policies in a Supporting Role to Monetary Policy," IMF Working Papers 2009/257, International Monetary Fund.
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    Cited by:

    1. Andrew Filardo, 2012. "Ensuring price stability in post-crisis Asia: lessons from the recovery," BIS Working Papers 378, Bank for International Settlements.

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