Macroprudential policy: effectiveness, unintended consequences, and challenges ahead

Over the last few years, policymakers have gained considerable experience of applying macroprudential instruments, particularly in the banking sector. Against that background, the time has now come to consolidate our understanding of the transmission, effectiveness and unintended consequences of macroprudential policy. In a set-up with numerous macroprudential tools, one key challenge in this regard is the need to take account of the various interactions and synergies that may arise from the use of particular combinations of measures. It is also important to evaluate whether, and to what extent, macroprudential objectives are achieved, as well as the role that the communication of macroprudential policy action plays in this context. Moreover, we also need to consider any unintended consequences that the implementation of macroprudential policy may have (e.g. implications for other policy areas and adverse distributional effects). Finally, there are various new challenges (such as climate change, technological innovation and governance issues) that may now also need to be taken into consideration when applying macroprudential policy.

It is in this context that the ECB and the Deutsche Bundesbank are jointly organising their fifth annual Macroprudential Policy Group (MPPG) research workshop, which is entitled “Macroprudential policy: effectiveness, unintended consequences, and challenges ahead” and will take place in Frankfurt am Main on 10 July 2020. This annual event is a useful opportunity for policymakers, regulators and academics to come together and share practical experience and research in the field of macroprudential policy.