In this setting, one of the main priorities for those responsible for ensuring the stability of the financial system with powers over macroprudential policy is, in my view, to develop a complete and coherent policy framework for the application and communication of that policy. And, in this task, the contribution of academia is of vital importance. In what follows, I would like to share some preliminary thoughts on some of the elements that, in my opinion, should be included in this framework. In particular, I would like to focus on two specific issues: first, the macroprudential policy objectives, which of course should be the basis for the activation of the instruments; and second, the choice among the different tools at the disposal of the macroprudential authority to best achieve these objectives in different circumstances. What should be the objective(s) of macroprudential policy? Allow me to focus now exclusively on banks and on one particular instrument, the Countercyclical Capital Buffer (CCyB), the Basel III macroprudential tool par excellence. According to the Basel Committee on Banking Supervision (BCBS) its first objective is rather narrow: The primary aim of the countercyclical capital buffer regime is to use a buffer of capital to achieve the broader macroprudential goal of protecting the banking sector from periods of excess aggregate credit growth that have often been associated with the build-up of system-wide risk.
In fact, it cannot be ruled out that banks will step up the growth of the most profitable portfolios, which are precisely those the authorities are trying to moderate, to the detriment of the rest, in order to safeguard aggregate profitability. To achieve the objective of exclusively moderating the growth of the exhuberant portfolios, it would be necessary to act on the relative costs of financing, making these more expensive in relative terms, through the activation of a countercyclical capital buffer to be applied exclusively on those credit segments. However, the coexistence between both tools can be complex, especially if a  8/11  transition from one or several sectorial buffers to the total buffer must be made. Accordingly, its use should be confined to very specific circumstances. Another example is the use of capital instruments vs borrower-based tools. From my perspective, making all prudential supervision rely upon the amount of capital that entities need is too reductionist: the experience accumulated during the last financial crisis clearly shows how credit underwriting standards are a crucial element for the stability of the banking system. And this same evidence4 also shows that the analysis of credit standards must be multidimensional. Therefore, it is not enough to supervise and control a specific characteristic of the loan; rather, a comprehensive approach must be adopted in which the different dimensions are addressed. This would also prevent entities from eluding restrictions by adjusting some other dimension of the loan.