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The Great RecessionLessons for Central Bankers$
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Jacob Braude, Zvi Eckstein, Stanley Fischer, and Karnit Flug

Print publication date: 2013

Print ISBN-13: 9780262018340

Published to MIT Press Scholarship Online: January 2015

DOI: 10.7551/mitpress/9780262018340.001.0001

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Central Banks, Macroprudential Policy, and the Spanish Experience

Central Banks, Macroprudential Policy, and the Spanish Experience

(p.99) 4 Central Banks, Macroprudential Policy, and the Spanish Experience
The Great Recession

Enrique Alberola

Carlos Trucharte

Juan Luís Vega

The MIT Press

Macroprudential policy, its toolbox and interactions with other policies are not completely established yet. Spain's ten-year experience with its dynamic provision provides a key reference. The analysis shows that dynamic provisions have proved useful to mitigate —to a limited extent— the buildup of risks and, above all, to provide substantial loss absorbency capacity to the financial institutions. This suggests that it could be an important macroprudential tool, if complemented by, and consistent with, the rest of policies. While there is a higher awareness of the contribution of monetary policy to financial stability, its role is in practice limited. The case of the euro area is telling. Macro-financial imbalances developed in sectors where financial integration was low and hence the effects were confined to the domestic economies. The asymmetry between a supranational monetary policy plus macroprudential surveillance and domestic implementation of macroprudential policies raises a set of issues which are worth exploring.

Keywords:   Macroprudential policy, Dynamic provision, Central banks, Spain

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