Macroprudential policy and institutional arrangement

ABSTRACT

Experience shows that various economic and financial crises, including the COVID-19 pandemic, pose complex challenges for the central bank when it comes to implementing macroprudential policy. From a broader perspective, macroprudential policy consists of three pillars-balanced intermediation, system resilience and inclusion-which correspond to the problems that need to be addressed by central bank policy. In the future, macroprudential policy will encounter challenges associated with digitalization and the surge of fintech and bigtech, increasing social inequality, and climate-change risks, all of which will embolden policy transformation and the innovation of its instruments. © BI Institute 2022. All rights reserved.