Such tools improve our ability to manage crises and, more importantly, to avoid them. The use of such techniques requires both the authority that comes with supervision and regulation and the understanding of the linkages among supervision and regulation, prudential standards, risk taking, relationships among banks and other financial market participants, and macroeconomic stability.
This decreases their financial fragility. In aggregate, they contribute towards a stronger and more stable economy and financial markets. Macroprudential policies such as loan-to-value ratio or debt-toincome ratio are relevant both from the households' and the financial system's perspective. These policies target households at large. Their aim is to ensure that, when needed, households have sufficient buffers and shock absorbers.