Abstract
Macroprudential and monetary policies may interact—and conflict—with each other although pursuing different objectives. This statement entails that when national authorities decide to use one policy to effectively achieve its statutory target, the side effects affecting the other policy should be considered. This is not only an economic challenge in the pursuit of price and financial stability but also a legal uncertainty to be kept under severe scrutiny, especially for the Eurozone where the responsibility for conducting macroprudential policy is statutorily separate from the ECB’s monetary tasks. The legal inconsistencies associated with this structural separation raise a number of questions about the legal architecture of the EU macroprudential banking supervision and monetary policy.
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Notes
- 1.
Galati and Moessner (2013), p. 846.
- 2.
For a better understanding on the role of mortgages defaults in 2007 crisis, see Mayer, Pence, and Sherlund (2008).
- 3.
- 4.
For a better insight of the real and financial transmission channels, see BCBS (2011).
- 5.
Enoch, Everaert, Tressel, and Zhou (2013), p. 8.
- 6.
- 7.
On this topic, see Dabrowski (2009); Avgouleas and Arner (2013); Vourloumis (2012). Besides, see also the Communication from the Commission—From financial crisis to recovery: A European framework for action, COM/2008/0706 final, Brussels, 29 October 2008 where the Commission stated the ‘need to redefine the regulatory and supervisory model of the EU financial sector, particularly for the large cross border financial institutions’.
- 8.
We refer, in particular, to the approval of the ‘EU Stability and Growth Pack’, designed to ensure that countries in the European Union pursue sound public finances and coordinate their fiscal policies, and the following ‘EU Six Pack’, containing five regulations and one directive intended to tighten economic coordination and macroeconomic surveillance among Eurozone countries.
- 9.
For example, we refer to the establishment of the European Stability Mechanism (ESM), and of the European System of Financial Supervision (ESFS) comprising the European Supervisory Authorities (ESAs) and the European Systemic Risk Board (ESRB). See also the creation of the Single Supervisory Mechanism (SSM), the Single Resolution Mechanism (SRM), and the Single Resolution Fund (SRF).
- 10.
For details, see Wachtel (2011).
- 11.
- 12.
Inter alia, see Schwarcz (2015).
- 13.
For example, see Buch (2014), arguing that safeguarding financial stability is now to be deemed as part of the operational responsibilities of Deutsche Bundesbank. See also the speech of Vítor Constâncio, Vice-President of the ECB, at the FT Banking Summit ‘Ensuring Future Growth’, held in London on 26 November 2014, and the remarks of Jeremy C. Stein, FED Governor, ‘Incorporating Financial Stability Considerations into a Monetary Policy Framework’, presented at the International Research Forum on Monetary Policy, Washington, DC, 21 March 2014.
- 14.
- 15.
Hockett (2013), p. 3.
- 16.
Wall (2010), p. 12.
- 17.
See Schwarcz (2015), p. 26.
- 18.
Borio and Shim (2007), p. 1.
- 19.
- 20.
On the issue, in general, see Altunbas, Gambacorta, and Marques-Ibanez (2009).
- 21.
- 22.
- 23.
See the speech of Vítor Constâncio, Vice-President of the ECB, at the Third Conference of the Macro-prudential Research Network, held in Frankfurt-am-Main, 23 June 2014.
- 24.
IMF (2013a), p. 9.
- 25.
Idem, p. 9.
- 26.
Smets (2014), p. 265.
- 27.
IMF (2013b), p. 9.
- 28.
Idem, p. 9.
- 29.
This separation can be immediately inferred from the EU primary law. In fact, while the primary objective of the ESCB is to maintain price stability pursuant to Article 127(1) TFEU and Article 3(3) of the ESCB Statute, the ESCB is mandated to contribute only to the conduct of supervisory policies carried out by other competent authorities. In accordance with Article 127(5) TFEU, these policies related to the prudential supervision of credit institutions and the stability of financial system (i.e. microprudential and macroprudential policies) are therefore not considered basic tasks of the ESCB. For details, see Lastra (2012), p. 1274.
- 30.
Enoch, Everaert, Tressel, and Zhou (2013), p. 386.
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Amorello, L. (2018). Introduction. In: Macroprudential Banking Supervision & Monetary Policy. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-94156-1_1
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