Macroprudential instruments and frameworks: report published by the CGFS

Press release  | 
21 May 2010

The Committee on the Global Financial System (CGFS) today released a report entitled Macroprudential instruments and frameworks: a stocktaking of issues and experiences. The work was overseen by a Coordinating Group chaired by Lex Hoogduin of The Netherlands Bank.

The report analyses the issues facing central banks as macroprudential policy frameworks are strengthened. It discusses macroprudential policy objectives, different instrument types, and issues relating to policy conduct. It reviews the experience to date with macroprudential policy, drawing from a CGFS survey of central banks on that topic and from a CGFS workshop for central banks on the use of instruments relating to property lending.

The report makes the following observations.

  • There is evidence that macroprudential measures help protect the financial system. Instruments such as caps on loan-to-value ratios in property lending have been used fairly often in response to property market exuberance, and seem to have shielded banking systems from severe property market downturns.
  • To date, authorities have taken pragmatic approaches, based on judgmental and discretionary use of instruments already used for other, typically microprudential, purposes.
  • In developing macroprudential policy frameworks further, the design choices open to authorities will depend on their economic and financial system structures, as well as prevailing law and market practices.

CGFS Chairman Donald L Kohn said that the report would be a relevant and timely input to the national and international discussions about strengthening the financial system.

Specific questions regarding the report may be sent to the CGFS Secretariat by email (CGFS@bis.org) or fax (+41 61 280 9100). For further information or to request a printed copy, please e-mail publications@bis.org.