Preparing for the Next Financial Crisis

On top of management standards imposed on institutions from an individual

perspective, taking their economic environment as given (Chapter 6), the GFC

highlighted the need for a macroprudential approach (Farhi and Tirole, 2011).

The latter takes into account institutions’ interactions with the nancial system

as a whole and their impact on the real economy, particularly in situations where

there is systemic risk (Chapter 1). Even though this concern is not new and, in

practice, microprudential policies already incorporate a wider perspective than

the situation of individual institutions, the notion of macroprudential policy

(MaP) has only recently acquired an operational content. Documents and re-

search that refer to it come largely from the ...