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Adapting Macropudential Policies to Global Liquidity Conditions

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  • Hyun Song Shin

Abstract

This paper outlines an approach to macroprudential policy for open emerging economies that emphasizes banking sector balance sheet management as the key driver of risk premiums, capital flows and vulnerabilities to sudden reversals in global liquidity conditions. This paper argues for the usefulness of monitoring the "non-core liabilities" of the banking sector as a signal of lending standards and potential vulnerability of the financial system to shocks. The paper presents a taxonomy of macroprudential tools, ranging from orthodox tools for bank capital regulation to more novel "liabilities-side" tools, such as the levy on non-core liabilities recently introduced by South Korea.

Suggested Citation

  • Hyun Song Shin, 2012. "Adapting Macropudential Policies to Global Liquidity Conditions," Working Papers Central Bank of Chile 671, Central Bank of Chile.
    • Handle: RePEc:chb:bcchwp:671
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    File URL: https://www.bcentral.cl/documents/33528/133326/DTBC_671.pdf
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    Cited by:

    1. Valentina Bruno & Hyun Song Shin, 2014. "Assessing Macroprudential Policies: Case of South Korea," Scandinavian Journal of Economics, Wiley Blackwell, vol. 116(1), pages 128-157, January.
    2. Chmielewska Anna & Sławiński Andrzej, 2021. "Climate crisis, central banks and the IMF reform," Economics and Business Review, Sciendo, vol. 7(4), pages 7-27, December.
    3. Miguel Fuentes D. & Claudio E. Raddatz K. & Carmen María Reinhart., 2015. "Capital mobility and monetary policy: an overview," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 18(1), pages 50-66, April.
    4. Idil Uz Akdogan, 2020. "The effects of macroprudential policies on managing capital flows," Empirical Economics, Springer, vol. 58(2), pages 583-603, February.

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