By contrast, once we have macroprudential instruments at our disposal we can use a leverage ratio or a loan to value ratio, just to mention two options. The ESRB has recognized the importance of having sufficient flexibility.
In an open letter to EU authorities it states: “Macroprudential authorities at both Member State and Union level need discretion to require additional disclosures and to tighten temporarily a diverse range of (Pillar I) calibrations”. Establishing a macroprudential policy framework in a monetary union reminds me of a complicated balancing act.