It is not enough to focus on the sustainability of public debt – mechanisms are needed to safeguard the stability of the financial system. Such mechanisms ensure that private credit is sustainable and that the failure to service debt does not pose a threat to the stability of the financial system. Macroprudential policy has exactly that objective: Preventing the build-up of systemic risk, i.e.
the risk of destabilising negative externalities in the financial system, and preventing excessive leverage of the private sector. Macroprudential policy takes a macroeconomic perspective on the financial sector’s health and resilience. It complements monetary policy and microprudential supervision. In Europe, macroprudential policy is a national task – involving close coordination at the European level.