Furthermore, it is important to determine how the task of preventing asset market bubbles from developing should be shared between macro prudential and monetary policy, if at all. Ensuring that policy makers are willing and able to act on any information that suggests that financial stability may be at risk is crucial.
Tightening macro prudential policy will never be popular since the costs of doing so are obvious and the benefits much harder to pin point. Clarity regarding the objective of macro prudential policy, where responsibility lies for policy and what the accountability arrangements are, as well as the independence of the decision makers are all essential features of a strong macro prudential framework.