ECB paper explores capital-based macroprudential measures
Dampened credit and asset price growth can have a “sizable” impact on predicted crisis probabilities
A working paper published by the European Central Bank (ECB) aims to quantify the costs and benefits of "capital-based macroprudential policies".
To help ensure they are implemented effectively, policy-makers should offer "concrete guidance" on how banks are to move to higher capital ratios, the authors say in their paper Assessing the costs and benefits of capital-based macroprudential policy.
Using a sample of 14 European countries, Markus Behn, Marco Gross and Tuomas Peltonen use an early
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