Moreover, we must be mindful of the inadequacy of indicators that focus too specifically on the markets and channels that transmitted the crisis of 2007 and 2008. Like Tolstoy’s unhappy families, every financial crisis is a crisis in its own way. For that reason, we need a flexible approach that combines science and art, and judgmentally weighs information from all indicators.
Macroprudential policy implementation Refining our ability to identify systemic threats is well and good. But when we detect a threat, what will we do about it? This question brings me to the tools and implementation of macroprudential policies. The first tool is information to help focus attention in policy circles, and among investors and the public, on looming systemic risks.