Rediscovering the Macroeconomic Roots of Financial Stability Policy: Journey, Challenges, and a Way Forward

Posted: 10 Jan 2012

See all articles by Claudio E. V. Borio

Claudio E. V. Borio

Bank for International Settlements (BIS) - Research and Policy Analysis

Multiple version iconThere are 2 versions of this paper

Date Written: December 2011

Abstract

The recent financial crisis has triggered a major rethink of analytical approaches and policy toward financial stability. The crisis has encouraged a sharper focus on systemic risk, the inclusion of a financial sector in macroeconomic models, a shift from a microprudential to a macroprudential orientation in regulation and supervision, and questions about whether price stability is a sufficient criterion to guide monetary policy. In the process, it has led to a rediscovery of the macroeconomic roots of financial instability. This review argues that this development is welcome but has not gone far enough. To substantiate this conclusion, the review documents this analytical and policy journey before suggesting a way forward.

Suggested Citation

Borio, Claudio E.V., Rediscovering the Macroeconomic Roots of Financial Stability Policy: Journey, Challenges, and a Way Forward (December 2011). Annual Review of Financial Economics, Vol. 3, pp. 87-117, 2011, Available at SSRN: https://ssrn.com/abstract=1981827 or http://dx.doi.org/10.1146/annurev-financial-102710-144819

Claudio E.V. Borio (Contact Author)

Bank for International Settlements (BIS) - Research and Policy Analysis ( email )

CH-4002 Basel, Basel-Stadt
Switzerland

Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
491
PlumX Metrics