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Macroprudential Policy
Report

Macroprudential Policy

A Case Study from a Tabletop Exercise

Tobias Adrian, Patrick de Fontnouvelle, Emily Yang and Andrei Zlate
New York Fed, 2016
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Editorial Rating

8

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  • Innovative

Recommendation

In the wake of the 2008 financial crisis, the US Federal Reserve has looked at using macroprudential tools – regulatory and rule-based actions, distinct from traditional monetary policy – to mitigate systemic risk in future financial disruptions. In this high-level examination of macroprudential applications, central bankers Tobias Adrian, Patrick de Fontnouvelle, Emily Yang and Andrei Zlate examine how and why the levers would work during a potential risk event. getAbstract recommends their comprehensive, esoteric insider’s report to central bankers, policy makers and financial professionals.

Take-Aways

  • The US Federal Reserve led a tabletop exercise designed to determine the use, as well as the effectiveness, of macroprudential tools in a financial crisis.
  • Macroprudential tools are “rules or requirements that enhance…safety and soundness” in the areas of capital, liquidity and credit. They also include “stress testing and supervisory guidance” in Fed communications.
  • The Fed analyzed a hypothetical low interest rate environment that dictated the use of macroprudential responses.

About the Authors

Tobias Adrian is a senior vice president and Emily Yang is an assistant vice president at the Federal Reserve Bank of New York. Patrick de Fontnouvelle is a vice president and Andrei Zlate is a senior financial economist at the Federal Reserve Bank of Boston.

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