Rethinking Macro Policy III - Session 2: Macro-Prudential Tools: Gathering Evidence IMF Spring Meetings - April 15, 2015 .................................. Chair: Stanley Fischer Robert Rubin Hyun Song Shin Paul Tucker

1. www.bis.org/speeches/sp150415.pdf
“Rethinking macro policy III: progress or confusion?”
http://www.imf.org/external/np/seminars/eng/2015/macro3/index.htm
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2. http://www.bis.org/speeches/sp150415.pdf 2
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3. • the limits of macroprudential tools and
their relationship with monetary policy
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4. Comparison of macroprudential
and monetary policy
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5. Comparison of macroprudential and monetary policy
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6. Comparison of macroprudential and monetary policy
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7. Comparison of macroprudential and monetary policy
macroprudential
monetary
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11. “currency is global, but
monetary policy is territorial”
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12. Complements or Substitutes?
“Are monetary policy and macroprudential
policy effective only when they tighten at the
same time, or it is possible to tighten one but
loosen the other?”
“In other words, must the two policies pull in
the same direction (be used as complements),
or can they pull in opposite directions (be used
as substitutes)?”
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13. Bruno, I Shim and H S Shin,
“Comparative assessment of macroprudential policies”,
BIS Working Papers, forthcoming, 2015
“we find that macroprudential
policies and monetary policy
often pull in the same direction.
There is a modest positive
correlation of around 0.2 between
tightening macroprudential and
monetary policy measures”
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14. “Initial research, including some conducted
here at the IMF, suggests that both
monetary and macroprudential policies
have some effect in constraining credit
growth, and that the two tend to be
complements, not substitutes, although
results vary by type of shock.”
1 See International Monetary Fund, The interaction of monetary and macroprudential
policies https://www.imf.org/external/np/pp/eng/2013/012913.pdf , Washington:
International Monetary Fund, 2013. See also E Cerutti, S Claessens and L Laeven,
“Macroprudential policies: analysing a new database”
http://www.imf.org/external/pubs/ft/wp/2015/wp1561.pdf , paper presented at the DNB-
EBC conference on “Macroprudential regulation: from theory to implementation”
http://www.tilburguniversity.edu/research/institutes-and-research-
groups/ebc/events/2015/item-conference-macroprudential-regulation-from-theory-to-
implementation/ on 29–30 January 2015, Amsterdam; K Kuttner and I Shim, “Can non-
interest rate policies stabilise housing markets? Evidence from a panel of 57 economies”
http://www.bis.org/publ/work433.pdf , BIS Working Papers, no 433, November 2013; and
O Akinci and J Olmstead-Rumsey “How effective are macroprudential policies? An
empirical investigation”
http://www.ozgeakinci.com/MacroprudentialPolicyEmpirical_Akinci_OlmsteadRumsey.pdf
Federal Reserve working paper.
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16. “be mindful of the limits”
• Having said all this, we should be mindful of the
limits to what can be achieved through
macroprudential policy.
• Most macroprudential tools are aimed at the
banking sector, especially the regulated banking
sector.
– Their design is influenced by the experience of past
crises.
– Watchwords are credit growth, leverage, maturity
mismatch, complexity and ”too big to fail”.
– While these factors are still relevant, it does not follow
that all future bouts of financial disruption must follow
the same mechanism as in the past.”
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19. “The prices are outcomes,
they’re not beliefs.”
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20. http://www.bis.org/speeches/sp150415.pdf 20https://twitter.com/BIS_org/status/588363838334042112
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21. “Robert Rubin steps up
for a closer look at Hyun Song Shin's numbers:”
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https://twitter.com/TalleyBerry/status/588363955103539200

22. “Few of these forces are amenable to the
macroprudential policies that have been
deployed so far. All this goes to show that
macroprudential policy is more than a
specific toolkit. It is about a perspective, or a
frame of mind.”
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24. • “The changing patterns of financial
intermediation mean that we need to revise
constantly our understanding of the
relevant players in the financial system.”
• “Long-term investors have become
increasingly important in recent years.
– Some of them are reaching for yield,
– but many long-term investors are chasing
disappearing yield in their attempt to hedge
duration, as government bond yields have
plunged in recent weeks.”
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