Domenico Lombardi, Pierre Siklos, 11 April 2017

Macroprudential policies increasingly lie at the heart of how central banks jointly manage of price and financial stability. However, consensus over best practice has yet to emerge. This column presents an improved indicator to measure individual economies’ macroprudential policy capacity. Improvements include incorporating the shadow banking sector, and distinguishing the types of institutions that wield authority. Results suggest that improvements continue to be made with respect to the development of an international financial system with improved resilience to shocks. 

Avinash Persaud, 20 November 2015

As the recent Financial Stability Board decision on loss-absorbing capital shows, repairing the financial system is still a work in progress. This column reviews the author’s new book on the matter, Reinventing Financial Regulation: A Blueprint for Overcoming Systemic Risks. It argues that financial institutions should be required to put up capital against the mismatch between each type of risk they hold and their natural capacity to hold that type of risk. 

Charles Goodhart, 24 December 2014

The Financial Stability Board’s recent consultative document proposes dividing global systemically important banks into holding companies and operating subsidiaries so as to insulate the latter from a major loss. This column poses the question of what will happen after the holding company is liquidated or written down in order to recapitalise the operating subsidiary – a question as yet unanswered by the Financial Stability Board.

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