Abstract
Post-crisis spread of macroprudential regulation requires some generalizations and identification of the ways of adapting it to Ukraine. Current consensus about taxonomy and functionality of macroprudential toolkit is corresponded with empirical findings of potential efficiency of such instruments to restrain credit and assets price inflation. At the same time, macroprudential policy may be vulnerable to possibilities of large borrowing abroad and credit activity leakage on unregulated segments of financial system. In the paper it is noted that commodity rich economies constitute a specific profile there macroprudential policy is meant to diminish vulnerability to commodity prices volatility. Macroprudential instruments may help to restrain abnormal credit expansion in non-tradable sectors and bound sectoral credit concentration, thus opening new opportunities for sectoral policy. It is proved that macroprudential policy guidelines for National Bank of Ukraine should be determined by the specifics of implementing macroprudential policy in the environment of capital flows being influenced by the commodity prices, as well as by specific institutional distortions caused by oligarchical banking.
Highlights
Since the global financial crisis, a transformation of the financial stability policy has been occurring
A decade after the global financial crisis began, we may observe the changes in approaches to implementing financial stability policy
There is a growing theoretical consensus that monetary policy, responding to financial imbalances and threatening the increased macroeconomic volatility, needs to be complemented by specialized instruments addressed to systemic risks and the pro-cyclicality of the financial system
Summary
Since the global financial crisis, a transformation of the financial stability policy has been occurring. Raising the rate to neutralize the inflow of capital may encourage external borrowing In both cases, the prevailing situation in the global liquidity behaviour and attitude to risk determines the accumulation of systemic vulnerability of the financial sector beyond the restrictive monetary actions. Despite the fact that the empirical analysis of macroprudential policy is considered to be rather limited in time, the authors are largely unanimous about several conclusions They include: the importance of the level of financial development for the effectiveness of macroprudential policy; the need to extend the scope of regulation to the para-banking sector; how the relevant instruments can influence the slowdown of credit boom and inflation of asset prices; higher efficiency of instruments oriented towards borrowers (especially households); the need to combine several tools at the same time to better address the diverse challenges in the financial sector, etc. While initially a tool of monetary policy, is almost unanimously considered a macroprudential instrument as it is viewed as direct leverage on the aggregate supply of credit to the economy
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