Thus, macroprudential objectives may sometimes conflict in the short run with political objectives pursued by means of tax policy. Even so, by setting the right incentives, taxation also can be a useful tool for safeguarding financial stability. Some activities, such as excessive short-term funding, represent a systemic risk and could be curbed by an appropriate levy.
This would make them more expensive and thus less attractive for market participants. Finally, macro- and microprudential policy can crucially impact on one another. Both aim to enhance resilience and ensure stability. However, one focuses on single entities, while the other looks at the system as a whole.