12  BIS central bankers’ speeches  systemically-important institutions as well as new guidelines as to how these institutions can be liquidated in an orderly manner in the event of a solvency crisis. One also looks in particular at how OTC trading in derivatives will be conducted and how the financial operations outside of the traditional banking sector – the so-called shadow banking sector – shall be supervised and regulated. A lot of effort has also been put into creating an organisation that enables the discovery and management of risks in the financial system that could affect several countries at the same time. In January 2011, the European Systemic Risk Board (ESRB) was formed, with the task of identifying threats to financial stability within the EU and of issuing warnings and recommendations to individual countries about such systemic risks. The ESRB cooperation has also included developing models to assess systemic risks and also macroprudential policy tools to counteract these risks. Moreover, the earlier European financial supervisory committees have now received the status of public authorities and been given the task of developing technical standards and guidelines in a large number of areas. They shall also play a mediating role, if member states are unable to reach agreement with regard to financial supervision. Recently, important steps have also been taken within the euro area towards the so-called banking union, with the European Central Bank (ECB) as joint financial supervisor for all banks in the member countries.
The situation today is thus similar, with countries around the world contemplating how best to conduct macroprudential policy. In some areas, particularly in some emerging markets, they already have some experience of what could be described as macroprudential policy. However, the results have been somewhat mixed and it is unclear what lessons can be learned. The research on macroprudential policy has now begun in earnest, but it is still quite new and has not yet generated any very clear conclusions on which to base a policy. It is probably unavoidable, therefore, that practical policy-making in coming years will consist to a great extent of “learning by doing” – with the emphasis on both “learning” and “doing”. Stabilisation of the financial cycle One of the two main tasks of macroprudential policy is to counteract the build-up of financial imbalances in the economy. This task can be described as macroprudential policy trying to stabilise something I here choose to call the financial cycle. The academic literature on this subject contains other similar concepts such as “credit cycle” and “leverage cycle.”1 What this means in simple terms is that the volume of loans, indebtedness, asset prices and attitude to risk in the economy vary over time in a way that is not necessarily linked to the economic cycle. One usually calls this the cyclical dimension, or time series dimension, of macroprudential policy.