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International Monetary Fund

This technical note examines the macroprudential policy framework in the Czech Republic. The Czech National Bank (CNB) has been actively developing its macroprudential policy framework for some time, including most recently the establishment of a separate Financial Stability Department. The authorities’ first line of defense against threats to financial stability has been sound macroeconomic policies. The Czech financial system overall appears stable. Stress tests indicate that banks would have sufficient capital and liquidity buffers to withstand a double-dip recession.

International Monetary Fund
This technical note examines the macroprudential policy framework in the Czech Republic. The Czech National Bank (CNB) has been actively developing its macroprudential policy framework for some time, including most recently the establishment of a separate Financial Stability Department. The authorities’ first line of defense against threats to financial stability has been sound macroeconomic policies. The Czech financial system overall appears stable. Stress tests indicate that banks would have sufficient capital and liquidity buffers to withstand a double-dip recession.
International Monetary Fund. Monetary and Capital Markets Department
This technical note assesses strengths and weaknesses of the macroprudential policy framework in Austria and provides policy recommendations. Financial sector resilience in Austria has improved significantly since the global financial crisis, and the macroprudential policy framework has been formalized. The institutional framework is appropriate for conducting macroprudential policy effectively, but it could be strengthened in some areas. However, some structural vulnerabilities to financial stability remain and cyclical risks are on the rise. Banks’ low efficiency and the resulting low profitability of domestic operations continues to be a key concern, especially given the fact that the Central Europe and South Eastern Europe region accounts for over 40 percent of Austrian banks' consolidated profits. The framework contains a clear mandate, well-defined objectives, and provides enough powers to the Financial Market Stability Board. Broad-based vulnerabilities remain contained but build-up of risks in the real estate sector warrants further action. The framework for addressing structural vulnerabilities is sophisticated, however, further improvements could be considered.
International Monetary Fund. Monetary and Capital Markets Department
While Norway’s institutional arrangement for macroprudential policy is uncommon, the authorities have shown strong willingness to act. The Ministry of Finance (MoF) is the sole macroprudential decision-maker in Norway, which is rare in international comparison. However, Norges Bank and the Finanstilsynet (FSA) play important advisory roles. In recent years, the authorities have taken substantive and wide-ranging macroprudential policy actions in response to growing systemic vulnerabilities—and these seem to have been effective in slowing down some of the riskier trends. The macroprudential policy toolkit is well stocked and actively used.
Mr. Heedon Kang, Mr. Francis Vitek, Ms. Rina Bhattacharya, Mr. Phakawa Jeasakul, Ms. Sònia Muñoz, Naixi Wang, and Rasool Zandvakil
This paper analyzes cross-border macrofinancial spillovers from a variety of macroprudential policy measures, using a range of quantitative methods. Event study and panel regression analyses find that liquidity and sectoral macroprudential policy measures often affect cross-border bank credit, whereas capital measures do not. This empirical evidence is stronger for tightening than for loosening measures, is distributed across credit leakage and reallocation effects, and is generally regionally concentrated. Consistently, structural model based simulation analysis indicates that output and bank credit spillovers from sectoral macroprudential policy shocks are generally small worldwide, but are regionally concentrated and economically significant for countries connected by strong trade or financial linkages. This simulation analysis also indicates that countercyclical capital buffer adjustments have the potential to generate sizeable regional spillovers.
International Monetary Fund
The past five years have seen an expansion of the scope of FSAPs to assess countries' macroprudential policy (MaPP) frameworks. This note documents this increase and offers some suggestions on how the treatment of MaPP issues in FSAPs can be further strengthened and better integrated into the overall financial stability assessment.
International Monetary Fund. European Dept.

Abstract

Economic activity continued to expand in the first half of 2018, albeit at a slower-than-expected pace, mainly in advanced Europe. Domestic demand, supported by stronger employment and wages, remains the main engine of growth. However, the external environment has become less supportive and is expected to soften further in 2019 owing to slowing global demand, trade tensions, and higher energy prices. Tighter financial conditions in vulnerable emerging market economies and maturing business cycles are also weighing on activity. Accordingly, growth is projected to moderate from 2.8 percent in 2017 to 2.3 percent in 2018 and 1.9 percent in 2019. That said, it is expected to remain above potential in most countries in the region.