Speaking here in the intellectual “powerhouse” of the University of Cambridge, I therefore call on the academic research community to make major efforts towards a better integration of financial and macroeconomic analyses to address these limitations. 17 A final challenge is given by the policy instruments available to contain systemic risks beyond monitoring and warning about them.
Macro-prudential regulation is a relatively new policy area. We have much experience of how micro-prudential regulation affects the stability of financial intermediaries and markets. A much more complex matter is using regulatory tools to stabilise the financial system as a whole. Having said that, I nevertheless see very encouraging discussions and progress on this front.