ECONOMICS
FINANCIAL MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Yes, I understand this from the notes
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No, I don’t understand this from the notes
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No, I don’t understand this, as I have not read the notes
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None of the above
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Detailed explanation-1: -The ultimate objective of macroprudential policy is to preserve financial stability. This includes making the financial system more resilient and limiting the build-up of vulnerabilities, in order to mitigate systemic risk and ensure that financial services continue to be provided effectively to the real economy.
Detailed explanation-2: -What are the effects of macroprudential policies on macroeconomic performance? Macroprudential policies are designed to make financial crises less likely or less severe. At the same time, they might also curb output growth by affecting credit supply and investment.
Detailed explanation-3: -Macroprudential action can be seen as an added cost to banks which in turn can affect banks’ profitability as an unintended side effect. This impacts their net income, the cost of credit and their ability both to lend and to build up capital via retained earnings.
Detailed explanation-4: -Macroprudential regulation is the approach to financial regulation that aims to mitigate risk to the financial system as a whole (or “systemic risk").