However, capital outflows were not extraordinary, foreign holdings of government bonds declined only modestly, and the foreign-exchange market remained highly liquid. The Fed’s decision in September to postpone tapering, needless to say, came as a surprise. This development has reduced market pressures somewhat. However, given uncertainty over the future course of U.S. monetary policy, new bouts of volatility cannot be ruled out.
There is no reason to think it will really be easier when using prudential tools for “macro-prudential” purposes. That is not to say that we can’t devise a framework combining certain rule-like behaviour with a sensible degree of discretion, but it might take a while. In the case of monetary policy, it took a couple of decades or more.