16 Feb 2015
Macro-prudential policies are key to cope with systemic risk – ECB’s Constancio
FXStreet (Mumbai) - Speaking at the Warwick Economics Summit over the weekend, European Central Bank (ECB) Vice-President Vitor Constancio said that the financial crisis has shown that macro-prudential policy and monetary policy work for different objectives, however, they need to be coordinated.
Key Quotes:
"Let me repeat the warning that without an effective macro-prudential policy, advanced economies will not be able to ensure financial stability,"
“It is therefore an important endeavour to keep fighting for the appropriate policies to smoothen the financial cycle and to sufficiently tame finance in order to avoid crises that threaten the future of our economies."
"Macro-prudential policies are key to cope with systemic risk and endogenous cycles in the financial sector. They are particularly important in the euro area at the current juncture, as the global environment of low interest rates and the rise in shadow banking activities exposes the financial sector to increased risks, "
"macro-prudential policy and monetary policy rely on separate tools and aim to achieve different objectives.
Yet, they need to be co-ordinated, which is a non-trivial task given that financial and business cycles could be de-synchronized. For these reasons, as I have already highlighted, macro-prudential policy should also be under the responsibility of central banks."
Key Quotes:
"Let me repeat the warning that without an effective macro-prudential policy, advanced economies will not be able to ensure financial stability,"
“It is therefore an important endeavour to keep fighting for the appropriate policies to smoothen the financial cycle and to sufficiently tame finance in order to avoid crises that threaten the future of our economies."
"Macro-prudential policies are key to cope with systemic risk and endogenous cycles in the financial sector. They are particularly important in the euro area at the current juncture, as the global environment of low interest rates and the rise in shadow banking activities exposes the financial sector to increased risks, "
"macro-prudential policy and monetary policy rely on separate tools and aim to achieve different objectives.
Yet, they need to be co-ordinated, which is a non-trivial task given that financial and business cycles could be de-synchronized. For these reasons, as I have already highlighted, macro-prudential policy should also be under the responsibility of central banks."