Macroprudential policy objectives

The financial sector fulfils certain basic functions in the economy (e.g. payments, financial intermediation, transfer of risk, management of the financial market infrastructure, etc.). If performed properly, they support economic growth; if not, the result can be instability and imbalances in the economy and the exacerbation of economic downturns.

The core and strategic objective of macroprudential policy is to contribute to maintaining the stability of the financial system as a whole so that it can fulfil its functions even in times of crisis. This includes, in particular strengthening the resilience of the financial system and reducing systemic risk, thereby ensuring the financial system's sustainable contribution to economic growth. The ESRB recommendation divides this core objective into selected sub-objectives:

  • mitigation and prevention of excessive credit growth - during excessive credit growth risk is accumulated, which financial institutions undervalue;
  • mitigation and prevention of excessive maturity mismatches in bank balance sheets and low market liquidity - a healthy financing structure based on stable sources of income from clients is one of the basic conditions of a stable financial system;
  • limiting the direct and indirect concentration risk - in the case of concentration toward a particular group of assets, the financial sector becomes more sensitive to the given asset's development;
  • limiting the systemic impact of misaligned incentives and moral hazard - in particular the existence of systemically important institutions that require public funds for rescue in the case of their failure;
  • strengthening the resilience of financial infrastructure - the risk of contagion spreading through links in the financial system.

The role of macroprudential policy is to identify, monitor and mitigate systemic risks to the financial system. The conduct of macroprudential policy consists of two main stages, namely the analysis of systemic risks and the actual implementation of policy in the form of risk mitigation.

More detailed information on macroprudential policy objectives