Officials the world over are keen on macroprudential policy. But it’s far from obvious what tools macroprudential policymakers should be given. It’s also not clear the degree to which central banks should be responsible for exercising the macroprudential mandate.
Fear not. The IMF released a guide on Tuesday on the pros and cons of different institutional arrangements for macroprudential policymaking. What the guide shows is that the degree to which central banks are responsible boils down to how officials weigh up two sets of risks: those stemming from a lack of accountability and those caused by groupthink. Read more