Macroprudential Policy in Post-Crisis Banking Regulation

DOI: 10.20542/0131-2227-2017-61-11-13-23

E. Dzhagityan (,,
National Research University Higher School of Economics, 17, bldg. 1, Malaya Ordynka Str., Moscow, 119017, Russian Federation;
Financial University under the Government of the Russian Federation, Institute for Research of International Economic Relations, 49, Leningradskii Prosp., Moscow, 125993, Russian Federation 

Acknowledgements. The article is an output of research project “Macroprudentialism of the contemporary banking regulation as a factor of financial stability” implemented as part of the individual research program of the School of world economy and international affairs at the National Research University Higher School of Economics. Some ideas of this article were presented at the 4th European Conference on Banking and the Economy (ECOBATE) (Winchester, U.K., October 2016) organized by the Association for Research on Banking and the Economy (ARBE) in collaboration with the University of Southampton. 

Abstract. The author looks into the optimal model of international banking regulation using principles and mechanism of macroprudential policy. Severity of the recent global financial crisis uncovered a series of deficiencies in traditional (microprudential) regulation. This triggered a broader and advanced understanding of the regulatory framework while putting on the agenda priorities of interrelationships between micro- and macro-levels. In fact, microprudential regulation lacks reliable tools that would address key determinants known for their contribution to financial instability including interconnectedness of systemically important banks, deficiencies of their stress resilience to adverse externalities, and systemic risks that undermine soundness of the financial system. Any of the above stress factors taken in isolation may incite crises, probability of which, however, could be reduced by instruments that link key performance indicators of the banking sector with macro-level dynamics. Although the concept of macroprudential approach in regulation is yet to be finalized, its instruments has already proved their validity and efficiency in navigating regulators with higher accuracy of capital adequacy measurement over the extended time horizon, coping with the excessively increasing assets, limiting credit appetites of banks, and ensuring countercyclicality of banking performance thus smoothening financial cycles. Unlike traditional regulation, the macroprudential domain provides more insights (however, still to a limited extent) into how to balance among the objectives of the post-crisis regulatory paradigm – banking sector dynamics, sustainable economic growth, and financial stability, which all together appear to be a trilemma of the global financial environment. It is believed that further operationalization of macroprudential regulation will add more consistency to national regulatory regimes that will give rise to further internationalization of the Basel Accords including standards and recommendations of Basel III. Despite promising perspectives for minimization of exogenous and endogenous risks in the banking industry, macroprudential mechanism is yet to find fine-tuned analytical tools that would quantify elements that are critical for the settlement of the regulatory ‘trilemma’ aiming at enhanced sustainability of international financial intermediation amid souring macro-level parameters and market pessimism. Besides, international regulators are still in search for the unbiased and rigor criteria of macroprudential institutional framework. Even though central banks are currently the place for macroprudential policy and supervision, the latter demands more rational grouping of, and customized approach for, its functions and responsibilities. This ensued from the specifics of macroprudential policy actions that may ultimately compromise independence of the central bank’s monetary policy, especially in the framework of inflation targeting, and impair financial cycle elasticity. Importance of the institutional design is also urged by closer synchronization of macroprudential policy with other areas of macro-financial management and supervision. This stands in line with macroprudentialism as a driving force of crisis mitigation. However, missing the acceptable macroprudential standards (in addition to instruments) will be seriously affecting shaping the integrated mechanism of banking regulation eligible for the objectives of post-crisis recovery.

Keywords: macroprudential regulation, microprudential regulation, Basel III, post-crisis recovery, banks’ stress resilience, systemic risks, financial stability, monetary policy 


1. Clement P. The Term “Macroprudential”: Origins and Evolution. BIS Quarterly Review, 2010. Available at: (accessed 25.02.2017).

2. Brunnermeier M., Crockett A., Goodhart C., Persaud A. & Shin H. The Fundamental Principles of Financial Regulation. Geneva Reports on the World Economy, 2009, vol. 11. Available at: (accessed 17.02.2017).

3. Acharya V., Richardson M. Restoring Financial Stability: How to Repair a Failed System. New York, Wiley & Sons, 2009. 401 p.

4. Goodhart C., Tsomocos D., Shubik M. Macro Modelling, Default and Money. LSE Financial Markets Group Special Paper Series, 2013, no. 224. Available at: (accessed 25.02.2017).

5. Drehmann M., Borio C., Tsatsaronis K. Characterising the Financial Cycle: Don’t Lose Sight of the Medium Term! Monetary and Economic Department, BIS Working Papers, 2012, no. 380. Available at: work380.pdf (accessed 25.02.2017).

6. Constancio V. Principles of Macroprudential Policy. Speech at the ECB–IMF Conference on Macroprudential Policy, Frankfurt am Main, 2016. Available at: (accessed 14.02.2017).

7. Claessens S. An overview of Macroprudential Policy Tools. IMF Working Paper WP/14/214. International Monetary Fund, 2014. Available at: (accessed 13.02.2017).

8. International Monetary Fund, Financial Stability Board, Bank for International Settlements. Macroprudential Policy Tools and Frameworks, 2011. Available at: (accessed 27.02.2017).

9. International Monetary Fund. Key Aspects of Macroprudential Policy, 2013. Available at: (accessed 14.02.2017).

10. Financial Stability Board. National/regional Responses by Jurisdiction. Excerpts on Establishing Regulatory Framework for Macroprudential Oversight, 2015. Available at: (accessed 27.02.2017).

11. Bank for International Settlements. Operationalising the Selection and Application of Macroprudential Instruments. CGFS Papers, 2012, no. 48. Available at: (accessed 27.02.2017).

12. G20 Leaders’ Communique Hangzhou Summit, 2016, 4–5 September. Available at: (accessed 26.02.2017).

13. International Monetary Fund, Financial Stability Board, Bank for International Settlements. Elements of Effective Macroprudential Policies. Lessons from International Experience, 2016. Available at: (accessed 14.02.2017).

14. Dzhagityan E.P. Bazel' III: v poiskakh kriteriev i stsenariev uspekha reformy bankovskogo regulirovaniya [Basel III: in Quest for Criteria and Scenarios of the Banking Regulation Reform Advancement]. Voprosy economiki (Issues of Economics), 2016, no. 2, pp. 77-93.

15. Bruno V., Shim I., Shin H.S. Comparative Assessment of Macroprudential Policies. Journal of Financial Stability, 2017, vol. 28, pp. 183-202. Available at: (accessed 11.03.2017).

16. Cerutti E., Claessens S., Laeven L. The Use and Effectiveness of Macroprudential Policies: New Evidence. Journal of Financial Stability, 2017, vol. 28, pp. 203-224. Available at: (accessed 11.03.2017).

17. Hannoun H. Towards a Global Financial Stability Framework. Speech at the 45th SEACEN Governors’ Conference, Cambodia, 2010, February 26–27. Available at: (accessed 11.03.2017).

18. G20 Finance Ministers and Governors. Measures which are Both Macroprudential and Capital Flow Management Measures: IMF Approach, 2015. Available at: (accessed 03.02.2015).

19. Bernanke B. The Effects of the Great Recession on Central Bank Doctrine and Practice. Speech at the Federal Reserve Bank of Boston 56th Economic Conference, Boston, 2011, October 18. Available at: (accessed 02.03.2017).

20. Federal Reserve System. Concentration Limits on Large Financial Companies. 12 CFR Part 251, Regulation XX. Federal Register, 2014, vol. 79, no. 220, pp. 68095-68107. Available at: (accessed 01.03.2017).

21. Financial Stability Board. 2016 List of Systemically Important Banks, 2016. Available at: (accessed 18.02.2017).

22. Basel Committee on Banking Supervision. Global Systemically Important Banks: Updated Assessment Methodology and the Higher Loss Absorbency Requirement, 2013. Available at: (accessed 18.02.2017).

23. Central Bank of the Russian Federation. On Enaction of the List of Systemically Important Credit Organizations (In Russ.) Available at: (accessed 18.02.2017).

24. Factiva database. Available at: (accessed 11.03.2017).

25. Statista database. Available at: (accessed 11.03.2017).

26. RIA Rating (In Russ.) Available at: (accessed 11.03.2017).

27. Gauthier C., Lehar A., Souissi M. Macroprudential Capital Requirements and Systemic Risk. Journal of Financial Intermediation, 2012, vol. 21, no. 4, pp. 594-618. Available at: (accessed 11.03.2017).

28. Karim D., Liadze I., Barrell R., Davis E.P. Off-balance Sheet Exposures and Banking Crises in OECD Countries. Journal of Financial Stability, 2013, vol. 9, no. 4, pp. 673-681. Available at: (accessed 11.03.2017).

29. Aikman D., Nelson B., Tanaka M. Reputation, Risk-taking, and Macroprudential Policy. Journal of Banking & Finance, 2015, vol. 50, pp. 428-439. Available at: (accessed 18.02.2017).

30. Allen L., Tang Y. What’s the Contingency? A Proposal for Bank Contingent Capital Triggered by Systemic Risk. Journal of Financial Stability, 2016, vol. 26, pp. 1-14. Available at: (accessed 05.03.2017).

31. Kupiec P.H. Will TLAC Regulations Fix the G-SIB Too-Big-To-Fail Problem? Journal of Financial Stability, 2016, vol. 24, pp. 158-169. Available at: (accessed 05.03.2017).

32. Dagher J., Dell’Ariccia G., Laeven L., Ratnovski L., Tong H. Benefits and Costs of Bank Capital. IMF Staff Discussion Note, 2016. Available at: (accessed 05.03.2017).

33. Financial Stability Board. Principles on Loss-absorbing and Recapitalisation Capacity of G-SIBs in Resolution. Total Loss-absorbing Capacity (TLAC) Term Sheet, 2015. Available at: (accessed 05.03.2017).

34. European Parliament. Loss Absorbing Capacity in the Banking Union: TLAC implementation and MREL Review. Briefing. 2016. Available at: (accessed 05.03.2017).

35. Federal Reserve System. Total Loss-Absorbing Capacity, Long-Term Debt, and Clean Holding Company Requirements for Systemically Important U.S. Bank Holding Companies and Intermediate Holding Companies of Systemically Important Foreign Banking Organizations. Regulations YY, Docket no. R-1523, 2016. Available at: (accessed 05.03.2017).

36. Barrell R., Karim D., Ventouri A. Interest Rate Liberalization and Capital Adequacy in Models of Financial Crises. Journal of Financial Stability, 2016. Available at: (accessed 05.03.2017).

37. Corrado L., Schuler T. Interbank Market Failure and Macro-Prudential Policies. Journal of Financial Stability, 2016. Available at: (accessed 05.03.2017).

38. Vašiček B., Žigraiova D., Hoeberichts M., Vermeulen R., Šmidkova K., De Haan J. Leading Indicators of Financial Stress: New Evidence. Journal of Financial Stability, 2017, vol. 28, pp. 240-257. Available at: (accessed 05.03.2017). 

Registered in System SCIENCE INDEX

For citation:
Dzhagityan E. Macroprudential Policy in Post-Crisis Banking Regulation. World Eonomy and International Relations, 2017, vol. 61, no. 11, pp. 13-23.

Comments (0)

No comments

Add comment






Dear authors! Please note that in the VAK List of peer-reviewed scientific journals, in which the main scientific results of dissertations for the degree of candidate and doctor of sciences should be published for the “MEMO Journal” the following specialties are recorded:
economic sciences:
5.2.5. World Economy.
5.2.1. Economic Theory
5.2.3. Regional and Branch Economics
political sciences:
5.5.4. International Relations
5.5.1. History and Theory of Politics
5.5.2. Political Institutions, Processes, Technologies


Current Issue
2024, vol. 68, No. 7
Topical Themes of the Issue:
  • The Supporting Structure of Global Security
  • Institutional Features of the Fourth Energy Transition
  • The Evolution of Modern German Christian Democracy
  • The Monarchies of the Persian Gulf and Central Asia
Submit an Article
The Editorial Board invites authors to write analytical articles on the following topics:
  • changes in the processes of globalization in modern conditions
  • formation of the new world order
  • shifts in civilization at the stage of transition to a digital society

The editors are also interested in publishing synthesis articles / scientific reviews revealing the main trends in the development of certain regions of the world - Latin America, Africa, South Asia, etc.