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The interaction of monetary and macroprudential policy 2014

This October 2014 workshop brought together researchers and practitioners from six countries to discuss issues relating to the interaction of monetary and macroprudential policies.

Past Event
Reserve Bank of New Zealand


Since the 2008 global financial crisis, central banks have refocused on their financial stability mandate, recognising the potential costs financial instability can have on the efficient functioning of the financial system. However, macroprudential and monetary policies do not always operate independently from the other, as both can work through the same transmission channels. Consequently, the coordination of the two policies has become an important issue for central bank and prudential policy decision-makers.

The speakers presented a range of papers centered around three main themes: 

  • how macroeconomic models are developing to incorporated financial stability concerns
  • aspects of macroeconomic policy implementation
  • the practical aspects of achieving an integrated approach to policy making.

As well as discussing the current state of thinking on each of these issues, the speakers and discussants could also reflect on their own country experiences, economic environments and institutional structures.

The workshop ended with a panel discussion which emphasised the need to be clear about the ultimate objectives of monetary and macroprudential policy. The panel discussed the transmission channels of the policies, where they overlapped and where they were distinct.

Finally, the panel discussed where the two polices were compliments and where they were substitutes. The panel generally agreed that policy makers needed to take a broad view when considering implementing each policy.


Monetary policy rules in the presence of an occasionally binding borrowing constraints
Presented by: Fang Yao (Reserve Bank of New Zealand)
Discussant: Sami Alpanda (Bank of Canada)

A policy model to analyse macroprudential regulations and monetary policy
Presented by: Sami Alpanda (Bank of Canada)
Discussant: Tim Robinson (Melbourne Institute)

Impact of macroprudential policy measures on economic dynamics: Simulation using a financial macro-econometric model
Presented by: Koji Nakamura (Bank of Japan)
Discussant: David Hargreaves (Reserve Bank of New Zealand)

Reverse-engineering: What explains the boom-bust cycle in the US house prices and mortgage debt?
Presented by: Kevin Lansing (Federal Reserve Bank of San Francisco)
Discussant: Kirdan Lees (NZ Institute of Economic Research)

Setting countercyclical buffer rates based on crisis probability models
Presented by: Karsten Gerdup (Norges Bank)
Discussant: Kevin Lansing (Federal Reserve Bank of San Francisco)

Spillovers, capital flows and prudential regulation in small open economies
Presented by: Hugo Vega de la Cruz (Central Reserve Bank of Peru) 
Discussant: Ilhyock Shim (Bank for International Settlements)

Panel discussion: achieving an integrated approach to monetary and macroprudential policy making
Discussant: Bernard Hodgetts (Reserve Bank of New Zealand), Guy Debelle (Reserve Bank of Australia) and Hyun Shin (Bank for International Settlements)