Stress tests and macroprudential scenario analyses are important tools that help us in gauging the effects of future macroeconomic conditions, in particular the effects of a monetary tightening and higher interest rates for the financial sector. Given that vulnerabilities in the financial sector have increased, macroprudential policy complements monetary policy by addressing risks to financial stability.
During the upswing of the financial cycle, countercyclical capital buffers can be built up that can be released if the system comes under stress.