Site Loader
Rock Street, San Francisco

The monetary stability condition has focused on position after the global crisis as a condition for monetary stability for large economic health and good life. Policymakers around the world known that concentrated on price stability and on the macroprudential regulation of individual job and markets was not enough. A technic macroprudential policy was requested to ensure the capacity to get back quickly from toughness, and stability of the financial system. The beginning of the term “macroprudential” can be traced back to the late 70s. One of the key alarms at this period in the financial monitoring circles was the fast growth of loans to developed counties and its probable negative effect on financial stability. In 1979, the term “macroprudential” was announced at a meeting in the Cooke Committee (Basel Committee on Banking Supervision) to report the question of international bank loaning. Shortly after the conference, the term “macroprudential” was introduced in a document prepared by the Bank of England (see Maes, 2009). The objective of this paper is to investigate the Prevention of systemic risk; macroprudential policies in UK area.The Financial Stability Board (2011) claim that macroprudential policy is presented to reduce systemic risk. Borio (2003), argues that the close objective of the macroprudential policy is to limit the risk of events of system-wide financial misery and its goal is to limit output costs (GDP loss) in the event of such actions. Securities regulators are also concerned about systemic risk, there are 3 growing key concerns should be forward through macroprudential policies:

(i)                 Allen and Wood (2006) write down the term “financial stability” (considering price stability as an independent objective) was initially used in 1994 by the Bank of England. an additional way to define financial stability through three elements: Capital Allocation, a continuous method to measure financial risk, the capability to assimilate financial and real economic impact (Schinasi, 2005)

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!

order now

(ii)              Systemic risk as one of the principal element in evaluating financial stability is a new idea in the central banks and policy-makers group. nevertheless, Bartholomew and Whalen (1995) describe systemic risk as “the probability of a brusque generally unexpected crash of confidence in a significant part of the banking or financial system with a potentially wide real economic effect.

(iii)            The Bank for International Settlements (2009) defines procyclicality as the event that over time the dynamics of the financial system and of the real economy add to each other, growing the amplitude of economic expansion and contraction that occurs repeatedly and not ensuring stability in both the financial sector and the real economy

Post Author: admin


I'm Glenda!

Would you like to get a custom essay? How about receiving a customized one?

Check it out