Macroprudential Policy Framework : A Practice Guide

This practice guide is primarily intended as a reference and guidance for emerging market economies in their migration to a formal macroprudential policy framework. It relies largely on the existing wisdom, knowledge, and experience and was written with the intention of assisting policy makers (and the World Bank staff working with these authorities) in the implementation of macroprudential policy frameworks in jurisdictions with the following characteristics representative of a typical emerging market and developing economy: 1) a simple and bank-dominated financial system where other financial sector segments are much smaller, but growing; 2) banking supervision function is within the central bank; 3) financial sector regulation/supervision is not integrated; 4) uncertain availability of quality data. A macroprudential policy framework is not a silver bullet for safeguarding financial stability. It is also useful to highlight that a macroprudential policy framework cannot take the place of other public policy frameworks. While pursuing macroprudential policy to build a more resilient financial system, authorities should also take into consideration the significant financial development needs that may exist in their respective jurisdictions. This Practice Guide has been structured in a logical sequence that mirrors implementation. The second and third sections are laid out to clarify and provide some context to the concept of a macroprudential approach to supervision and discuss the institutional framework. The fourth and fifth sections deal with the operational aspects of macroprudential policy framework that are timely detection of systemic risks using early warning systems and addressing the buildup of systemic risks with macroprudential policy instruments.

Bibliographic Details

Main Authors:	Krishnamurti, Damodaran, Lee, Yejin Carol
Language:	English en_US
Published:	Washington, DC: World Bank 2014-04-29
Subjects:	ACCESS TO INFORMATION, ACCOUNTABILITY, ACCOUNTING, ARBITRAGE, ASSET CLASSES, ASSET PRICE, ASSET PRICES, ASSET QUALITY, ASSETS RATIO, AUDITING, AUTONOMY, BALANCE SHEET, BANK BALANCE SHEETS, BANK EXPOSURE, BANK FOR INTERNATIONAL SETTLEMENTS, BANK GOVERNORS, BANK SUPERVISION, BANKING CRISES, BANKING SECTOR, BANKING SUPERVISION, BANKING SYSTEM, BONDS, BORROWING COSTS, CAPITAL ADEQUACY, CAPITAL FLOWS, CAPITAL MARKET, CAPITAL MARKETS, CAPITAL REQUIREMENTS, CDS, CENTRAL BANK, CENTRAL BANKS, CHECKS, CLEARING HOUSES, CLEARINGHOUSE, COLLATERAL, COLLECTIVE ACTION, COMMERCIAL PAPERS, COOPERATIVE BANKS, CREDIBILITY, CREDIT DEFAULT, CREDIT DEFAULT SWAP, CREDIT DEFAULT SWAPS, CREDIT DERIVATIVES, CREDIT EXPANSION, CREDIT GROWTH, CREDIT INFORMATION, CREDIT INFORMATION BUREAU, CREDIT RATINGS, CREDIT SPREADS, CREDIT UNIONS, CURRENCY, CURRENCY MISMATCHES, CURRENCY RISK, CURRENT ACCOUNT DEFICIT, DEBT, DEBT SERVICE, DEFAULT RISK, DEFAULTS, DEPOSIT, DEPOSIT INSURANCE, DEPOSITS, DERIVATIVES MARKET, DEVELOPING ECONOMIES, DEVELOPING ECONOMY, DEVELOPMENT FINANCE, ECONOMIC DEVELOPMENT, EMERGING ECONOMIES, EMERGING MARKET, EMERGING MARKET ECONOMIES, EMERGING MARKET ECONOMY, EXCESS LIQUIDITY, EXCHANGE RATE, EXTERNAL DEBT, FINANCIAL CRISIS, FINANCIAL DATA, FINANCIAL DEVELOPMENT, FINANCIAL DISTRESS, FINANCIAL FLOWS, FINANCIAL HEALTH, FINANCIAL INSTABILITY, FINANCIAL INSTITUTION, FINANCIAL INSTITUTIONS, FINANCIAL MARKET, FINANCIAL MARKETS, FINANCIAL REGULATION, FINANCIAL SAVINGS, FINANCIAL SECTOR, FINANCIAL SECTOR DEVELOPMENT, FINANCIAL SERVICES, FINANCIAL STABILITY, FINANCIAL STRESS, FINANCIAL SYSTEM, FINANCIAL SYSTEM STABILITY, FINANCIAL SYSTEMS, FISCAL DEFICIT, FOREIGN CURRENCY, FOREIGN CURRENCY EXPOSURES, FOREIGN DIRECT INVESTMENTS, FOREIGN EXCHANGE, FOREIGN EXCHANGE MARKETS, GLOBAL FINANCIAL SYSTEM, GOVERNMENT FINANCE, GROSS DOMESTIC PRODUCT, HEDGE FUNDS, HOLDING, IMPLICIT SUBSIDIES, INCOME, INDEBTEDNESS, INDIVIDUAL FIRM, INFLATION, INFORMATION SYSTEMS, INSTRUMENT, INTERBANK MARKETS, INTERNATIONAL BANK, INTERNATIONAL BANKING, INTERNATIONAL FINANCIAL CRISES, INTERNATIONAL SETTLEMENTS, ISSUANCE, JURISDICTIONS, LAWS, LEGAL FRAMEWORK, LEGAL FRAMEWORKS, LEGISLATION, LENDER, LENDER OF LAST RESORT, LEVEL OF CONFIDENCE, LEVY, LIQUID ASSETS, LIQUIDITY, LIQUIDITY RISK, LOAN, LONG-TERM INVESTMENTS, MANDATES, MARGIN REQUIREMENTS, MARK-TO-MARKET, MARKET BORROWING, MARKET DISCIPLINE, MARKET INFORMATION, MARKET INFRASTRUCTURE, MARKET INFRASTRUCTURES, MARKET PARTICIPANTS, MARKET PLAYERS, MARKET PRICES, MARKET RISK, MATURITY, MATURITY MISMATCH, MATURITY MISMATCHES, MATURITY TRANSFORMATION, MATURITY TRANSFORMATIONS, MICRO-FINANCE, MICRO-FINANCE INSTITUTIONS, MIGRATION, MONETARY FUND, MONETARY POLICY, MONETARY STABILITY, MORAL HAZARD, MORTGAGE, MORTGAGE LOAN, MORTGAGE MARKET, MORTGAGES, MUTUAL FUNDS, NET INTEREST MARGIN, NONBANK FINANCIAL INSTITUTIONS, NONBANKS, NONPERFORMING LOAN, NONPERFORMING LOANS, NPL, OFF BALANCE SHEET, OFF BALANCE SHEET ITEMS, OUTPUT, PAYMENT SERVICES, PEER REVIEW, PENSION, PENSION FUNDS, PENSIONS, POLICY RESPONSE, POLICY RESPONSES, POLITICAL ECONOMY, PORTFOLIO, PRICE VOLATILITY, PROBABILITY OF DEFAULT, PROFITABILITY, PRUDENTIAL REGULATIONS, PRUDENTIAL REQUIREMENTS, PRUDENTIAL STANDARDS, PUBLIC FUNDS, PUBLIC POLICIES, PUBLIC POLICY, RATE OF RETURN, REAL SECTOR, REGULATORY FRAMEWORK, REGULATORY FRAMEWORKS, REGULATORY STRUCTURES, REPAYMENT, RESERVE, RESERVE REQUIREMENTS, RESERVES, RETURN ON ASSETS, RETURN ON EQUITY, RISK CAPITAL, RISK MANAGEMENT, SAFETY NET, SECURITIES, SETTLEMENT, SETTLEMENT SYSTEMS, SHORT-TERM EXTERNAL DEBT, SOLVENCY, SOVEREIGN DEBT, STANDARD ASSET, STOCK MARKET, SUPERVISORY AGENCIES, SUPERVISORY AUTHORITIES, SUPERVISORY AUTHORITY, SURCHARGES, SYSTEMIC RISK, TIER 1 CAPITAL, TRANSPARENCY, TREASURY, TURNOVER, VALUATION, VARIABLE RATE,
Online Access:	http://documents.worldbank.org/curated/en/2014/04/19456627/macroprudential-policy-framework-practice-guide https://hdl.handle.net/10986/18152
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