Macroprudential supervision: critically examining the developments in the UK, EU and internationally

Abstract

Macroprudential supervision has become a key aspect of financial regulation in the UK, EU and globally in the aftermath of the global financial crisis. This article examines the UK's and EU's post-crisis reforms in establishing regulatory infrastructures to carry out macroprudential supervision. The new regulatory infrastructures at the UK and EU levels would be based on two key aspects: comprehensive information surveillance and networked cooperation between key agencies but centred around central banks. The article critically discusses the difficulties and challenges in information surveillance in the UK and EU and draws some comparative insights with the Office for Financial Research established in the US. The article also argues that macroprudential supervision in the UK would likely be dominated by the Bank of England although a networked agency structure supports such supervision. Some implications of such domination are discussed. Central bank dominance in macro-prudential supervision is also likely to be the case at the EU level as well. However, the article warns that macroprudential supervision at the EU level remains vague and is likely to be bound up with other policies and objectives.