Prerequisites for Designing Macroprudential Toolkit
In the last decade, the macroprudential policy discussions have increasingly been bringing more attention in the context of the global financial crisis, its resolution, and establishing the grounds for future crises prevention.
Countries needed to reconsider their financial stability framework, the institutional arrangements and policies and tools to mitigate systemic risk. In this context, macroprudential policymaking’s role is in limiting the systemic risk and potential negative consequences on the financial system and the real economy. Through macroprudential policies, the objectives are to increase the resilience of the financial system, contain the build-up of systemic vulnerabilities over time, control structural vulnerabilities within the financial system arising from interlinkages, common exposures, and the critical role of intermediaries in key markets (IMF-FSB-BIS, Elements of Effective Macroprudential Policies, 2016).
At the level of the European Union, aligning macroprudential policies is of high importance. National regulatory authorities are to enhance their capacities, identify the main resources of systemic risks and adopt the measures necessary to maintain financial stability (ESRB, Recommendation on the macro-prudential mandate of national authorities, 2011).
In South East Europe (SEE), countries have also been setting up and designing their macroprudential policy framework and instruments in their aim for harmonization with EU recommendation in the context of the accession process. Challenges normally stem from shallow, (foreign) bank-dominated financial system, vulnerability to external shocks, and extensive euroization, which was considered at this workshop.
This workshop complemented the trainings and technical activities of other providers in the region and respond to the specific needs and interests of the SEE constituency. The focus was on operational and implementation challenges. It served as a platform for discussions on specifics and foremost the prerequisites for design and implementation of the macroprudential toolkit, how to determine the most appropriate approach, how to establish the legal and operational framework, design the policy instruments, and what is needed to evaluate impact or recalibrate approach.
At the workshop, we reviewed the objectives of macroprudential policy and examined the policy process to operationalize macroprudential policy. Topics included the mapping of tools to sources of risks, the calibration of tools in light of benefits and costs, and the potential for policy tools to be relaxed in times of stress.
More focus was devoted to the institutional arrangements for macroprudential policy. Even though there is no “one-size fits all”, it is desirable for institutional arrangements to provide for willingness to act, ability to act, and cooperation in risk assessment and mitigation. We looked at how different institutional models can achieve these desirables.
The workshop took into account participant country specifics based in a form of group discussions of practical, statistical and analytical prerequisites for effective monitoring of systemic risk, and implications for determining the components of an effective toolkit. We discussed different arrangements in the region, as well as the legal framework to cover practical issues relating to the interinstitutional allocation of responsibilities and effective coordination in the conduct of macroprudential policies.
- Primož Dolenc, Deputy Governor, Bank of Slovenia
- Erlend W Nier, Deputy Chief of the Monetary and Macroprudential Policies Division, Monetary and Capital Markets Department, International Monetary Fund
Erlend is covering policy issues arising in the areas of monetary policy, macroprudential policy, as well as the management of capital flows. He has been leading the Fund’s policy development in the area of macroprudential policy and is the main author of several IMF Policy papers on the topic. His country work includes FSAPs to Korea, Romania and Turkey, Article IV consultations with the Euro area and Poland, as well as several technical assistance missions on macroprudential policy.
Prior to joining the IMF in 2008, Erlend was Research Manager with the Bank of England’s Financial Stability Directorate, leading research and policy work in areas such as market discipline for banking firms, the ‘procyclicality’ of capital requirements under Basel II, contagion in financial networks, liquidity and liquidity regulation, and public policy in clearing and settlement systems. Erlend holds a PhD from the London School of Economics.
- Mirna Dumičić, Economist and Financial Stability Expert, European Central Bank
Mirna is an economist and a financial stability expert at the Macroprudential Policy Division in the European Central Bank, where she came in October 2016 from the Financial Stability Department of the Croatian National Bank. She holds a PhD in economics from Faculty of Economics, University of Split. In 2012, she and her co-author Tomislav Ridzak won the Annual award of the prof. dr. Marijan Hanzekovic Foundation for the best research paper and in 2015 she won two awards for the best doctoral thesis - Annual award “Pero Jurkovic, Ph.D.” and the Accountants and Financial Officers Award.
- Mojca Piškurić, Deputy Director and Head of Policy, Slovenian Insurance Supervision Agency
Before joining the AZN in 2015 Mojca has worked as the Chief Risk Officer of Triglav Insurance Company. She has more than 14 years of experience in various risk management mandates, 10 years thereof in the insurance industry. In her current role she is responsible for the development of policy stances of the AZN, implementation of risk-based supervision, macroprudential supervision and analytics. She is a member of the Slovenian Financial Stability Board and a member of the Risk and Financial Stability Committee at EIOPA.
Mojca has a degree in applied mathematics from the University of Ljubljana and a doctorate in probability and game theory from the Technical University of Dresden. She is also a certified financial risk manager (FRM) and a frequent lecturer at numerous international conferences and educational events in the field of insurance.
- Tuomas A. Peltonen, Deputy Head, European Systemic Risk Board Secretariat
Tuomas's main tasks include the management of the ESRB Secretariat, systemic risk analysis and its presentation to the ESRB General Board as well as interaction with the ESRB member institutions. Prior to the ESRB, Tuomas was with the European Central Bank (ECB) since 2004, where he worked in various positions at the Directorate General Macroprudential Policy and Financial Stability, in the Directorate General Market Operations and in Directorate General International and European Relations. Tuomas received his BSc and MSc (Econ) degrees from University of Turku in 1998 and 1999. Before completing a PhD (Econ) degree at the European University Institute in 2005, Tuomas worked with the Bank of Finland. His research interests include macroprudential policy, systemic risk analytics and early-warning models. Tuomas has published several articles related to banking, financial stability, financial markets and emerging economies in academic journals like Journal of Banking & Finance, Journal of Financial Stability, IMF Economic Review, and International Journal of Finance and Economics
- Frank Dierick, Advisor, European Systemic Risk Board Secretariat
Frank has a Master degree in Economics, Law and Finance. He initiated his career as a Research Analyst at the University of Antwerp in the area of Energy Economics. Afterwards he moved to the ING Group, a Belgian Insurance Company, where he worked as an Organisational Analyst. For ten years he worked as an Adviser in the Banking Supervision Department of the Belgian Banking and Finance Commission. He was responsible for the off-site supervision of a number of banks and the development of supervisory policy (e.g. in the area of liquidity risk, country risk, use of internal models). Later he became an Expert, Senior Expert and Principal Expert in the ECB’s Financial Stability Department. His main responsibilities included being secretary of the Banking Supervision Committee (BSC) and a number of its structures (Working Group on Developments in Banking, Task Force on Crisis Management).
Since October 2010, Frank has been an Adviser in the ESRB Secretariat. He has been involved in the Advisory Technical Committee, in Work Streams on Shadow Banking, Money Market Funds and High Frequency Trading. Frank has also been coordinating the production of the ESRB’s Macro-Prudential Commentaries.
Who was it for
Finance officials from the financial stability departments of central banks and financial supervisory authorities, as well as officials from ministries of finance working on the regulatory environment of the financial sector were invited to the workshop.
The workshop was designed in interactive format, providing practical and workable solutions elaborated through a mix of expert-based learning, hands-on operational experience, and interventions of systematic exchange of knowledge and regional experience in a form of shorter participant presentations and discussions of concrete examples. Active participant engagement was expected at the workshop.
This learning initiative was supported by: