Macroprudential policy at the ECB: Institutional framework, strategy, analytical tools and policies

By July 18, 2019 18:58

Macroprudential policy at the ECB: Institutional framework, strategy, analytical tools and policies

Occasional Paper Series – No 227 / July 2019


A first draft of this paper was circulated at the occasion of the third annual ECB Macroprudential Policy and Research Conference held on 17-18 May 2018.

This occasional paper explains how the financial stability and macroprudential policy functions are organised at the ECB, including a brief description of the analytical tools that have been developed to enable the ECB to effectively fulfil its responsibilities in this regard. Since the launch of the ECB Financial Stability Review in 2004 by my late colleague Tommaso Padoa-Schioppa, it has been clear that the ECB, like other central banks, has to pay close attention to the stability of the financial system in the euro area. Even when central banks do not have an explicit financial stability mandate, which is not the case with the ECB, 1 the markets and general public still consider central banks to be responsible for the overall stability of the financial system. After all, in historical terms, the objective underpinning the establishment of central banks in the 19th century was to stabilise the turbulence created by free private banking. Later, the interrelationship between monetary policy and the stability of the financial system became crucial from the perspective of the transmission channel of monetary policy decisions.

The creation of the banking union and the decision to entrust the ECB with the responsibility for both micro- and macroprudential supervision generated the need for completely new organisational procedures and analytical tools. Following the preparation of the regulation establishing the Single Supervisory Mechanism (SSM)2 , in which the ECB actively participated, the ECB’s Governing Council decided on the internal procedures governing the macroprudential policy function in November 2013. Besides the general decision-making rules, which are described in Chapter 3, two informal internal bodies were created, namely the Macroprudential Coordination Group (MPCG) and the Macroprudential Forum (MPF), to facilitate collaboration between ECB Banking Supervision and the Directorate General Macroprudential Policy and Financial Stability (DG/MF). The ECB’s Governing Council and Supervisory Board, which constitute the MPF, meet every quarter to discuss issues related to financial stability at the euro area and member country level. The conduct of macroprudential policy is a joint endeavour between the national competent authorities and the ECB. The latter can only further tighten measures decided at the national level, the rationale being that the ECB’s role is to counter any possible “inaction bias” on the part of member countries. The MPF meetings allow the Governing Council, as the ultimate decision-making body, to express its view and provide guidance on the use of macroprudential policy


By July 18, 2019 18:58



Check out our events calendar, with a lot of interesting #webinars! #research #HomeOffice

The #coronavirus crisis has highlighted the market’s belief in the long-term potential of listed market champions of sustainability. Our expert #Rupert_Welchman says more in The Good Investment Review by @goodmoneygirl.

Billions, Trillions, or Quadrillions?

All of the World’s Money and Markets...

Top the list?

#Derivatives!! ( estimated at $1 quadrillion)

via @VisualCap

Diversificatie loont! Maar zoals @arjenlubach zich zo mooi kan afvragen: #hoedan?

De #GlobalMarketPortfolio is een mooi startpunt!

Zie verschil tussen @DNB_NL data van #pensioenfondsen en Global Market Portfolio #assetallocation -> via @AlphaResearchNL

Load More...

Search on date

July 2019