What is macroprudential policy?

Published: 5/6/2020

Macroprudential policy includes measures, instruments and activities necessary to maintain the stability of the financial system as a whole by strengthening financial system resilience and preventing and mitigating systemic risks.

To identify systemic risks means to determine their nature (structural or cyclical), location (segment of the system in which they develop) and source (for example, whether they reflect more disruptions on the supply side or on the demand side). With regard to such diagnostics, instruments are optimised and intensity of measure is calibrated which should cover risks most efficiently, reduce regulatory risk of inaction bias and minimise potential negative spillovers to other sectors as well as unexpected cross-border effects. Macroprudential policy objectives and instruments are part of a broader matrix of economic policy instruments whose complete success requires efficient coordination, which is in the Republic of Croatia effected by means of the Financial Stability Council.

Macroprudential measures that serve to protect financial stability include preventive measures, measures aimed at increasing banking system resilience and other measures.

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