We want to ensure that the financial sector does not become a source of problems for the rest of the economy, or amplify problems to the rest of the economy. It is also important to be clear what macroprudential regulation is not seeking to achieve. It does not – and cannot – aim to target asset prices, including property prices.
Asset prices are driven by a number of factors, many of which are outside of the control of central banks and regulators. And it does not aim to replace financial institutions’ own prudential risk management practices, which remain central to the functioning of the financial system. These are system-wide policies, with a financial stability objective.