07.05.2014Micro-Prudential to Macro-Prudential Regulation

Professor Alexander has written an essay titled "Redesigning Financial Regulation to Achieve Macro-Prudential Objectives" identifying how the financial crisis of 2007 has shifted prudential regulation. Prior to the crisis the focus of regulators lay on the individual financial institution, ignoring structural risk across the financial system using a micro-prudential focus. The crisis however has shown that the focus needs to be shifted away from just the individual institutions and towards identifying linkages between institutions and investors on a large, cross-border scale, therefore utilising macro-prudential regulation. The essay analyses possible forms of such macro-prudential supervision and offers possible regulatory reforms.

Micro-Prudential to Macro-Prudential Regulation (PDF, 423 KB)

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