In other words, it is about mitigating the financial cycle especially in booms. 2 Below I will mainly focus on the second objective. As we focus on the prevention of excessive build-up of risks in the financial sector, it is essential to note that macroprudential policy complements microprudential policy. Both use the same tools, especially capital requirements.
But macroprudential policy also uses other tools such as loan-to-value caps. 1  Cf. Kashyap, A. (2013). Notes for Northwestern Advanced Workshop for Central Bankers. 2  Cf. Freixas, X., L. Laeven, J-L. Peydro (2015): Systemic risk, crises, and macroprudential regulation. The MIT Press.