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Experience with macroprudential policy is growing, complemented by an increasing body of empirical research on the effectiveness of macroprudential tools. However, since the experience does not yet span a full financial cycle, the evidence remains tentative. "The wide range of institutional arrangements and policies being adopted across countries suggest that there is no 'one-size-fits-all'. Nonetheless, accumulated experience highlights - and this paper documents - a number of elements that have been found useful for macroprudential policy making," the publication says. These include:
A clear mandate that forms the basis for assigning responsibility for taking macroprudential policy decisions.
Adequate institutional foundations for macroprudential policy frameworks. Many of the observed designs give the main mandate to an influential body with a broad view of the entire financial system.
Well-defined objectives and powers that can foster the ability and willingness to act.
Transparency and accountability mechanisms to establish legitimacy and create commitment to take action.
Measures to promote cooperation and information-sharing between domestic authorities.
A comprehensive framework for analysing and monitoring systemic risk as well as efforts to close information gaps.
A broad range of policy tools to address systemic risk over time and from across the financial system.
The ability to calibrate policy responses to risks, including by considering the costs and benefits, addressing any leakages, and evaluating responses. In financially integrated economies, this includes assessing potential cross-border effects.
Elements of effective macroprudential policies