ESRB publishes materials on macro-prudential policy: ESRB has published a Handbook and a flagship report on developing and making macro-prudential policy operational. ESRB identifies the intermediate objectives of macro-prudential policy and the instruments available in the CRD4 package to fulfil them. These objectives are the prevention of:

  • excessive credit growth and leverage;
  • excessive maturity mismatch;
  • direct and indirect exposure concentrations; and
  • misaligned incentives with a view to reducing moral hazard.

The instruments analysed in the Handbook are:

  • the countercyclical buffer;
  • real estate instruments; 
  • instruments for systemic banks and structural risks;
  • liquidity instruments;
  • Pillar 2 instruments; and
  • national flexibility measures. 

The Handbook gives examples of cases where Member States' competent authorities have already used macro-prudential instruments. It also discusses indicators that may trigger macro-prudential action and provides advice on the policy cycle. Related to this, it deals with instrument selection, guided discretion in decision-making, communication and cross-border issues. ESRB's flagship report offers a high-level overview of the Handbook, also warning that the scope of macro-prudential policy is wider than banking and that ESRB, with its system-wide remit, will propose measures where and when needed. The flagship report closes with some of the issues that ESRB may cover in its contribution to this year's review of the macro-prudential rules in the CRD4 package. (Source: Macro-Prudential Policy Handbook and Flagship Report