However, it had sold financial insurance instruments against the potential default of the securitisations of these loans (CDSs) to its clients, who were, above all, other financial institutions. The contagion effect to the rest of the financial system that the bankruptcy of AIG would have caused was on such a scale that it led to its bailout by the US authorities. But the mere expectation of this type of bailout can affect managers’ risk-taking decisions in periods of expansion, which may be excessive precisely because they expect to be bailed out in the event of difficulties. This is the wellknown “too big to fail” problem. The multi-dimensional nature of systemic risk means that macroprudential policy needs an extensive range of tools (or instruments) to allow it to tackle each of those dimensions as efficiently as possible. Moreover, given that a wide variety of institutions with greatly diverse characteristics operate in the financial sector, these instruments should be adjusted to their particularities. In this respect, the significant interconnectedness of these financial system players calls for an all-encompassing overview when taking macroprudential policy decisions. And this requires close coordination among key institutions if, as in Spain, the oversight of the financial system is shared by different national [Banco de España, CNMV (National Securities Market Commission) and the Directorate General of Insurance and Pension Funds of the Ministry of Economic Affairs and Digital Transformation] and European authorities. No less important is the need for international coordination.
A recent Banco de España article8 finds that this measure has, in conjunction with other measures adopted, enabled the provision of bank lending to the productive sectors of the economy to be increased. Also, the ESRB has during the crisis analysed various issues, such as: i) the implications for the financial system of the public guarantee programmes and other fiscal measures to protect the real economy; ii) the lack of market liquidity and its consequences for asset management and insurance companies; iii) the procyclical impact of debt downgrades on markets and financial institutions, and iv) the liquidity risks derived from margin calls. These avenues of research led to a set of recommendations for the EU Member States’ authorities to act in unison on the appropriate monitoring of the risks and vulnerabilities identified and on potential measures to mitigate them during the crisis. The future of macroprudential policy Allow me to conclude with some brief thoughts on the future of macroprudential policy. In my view, there are two aspects on which we should focus in the coming years. First, the current crisis should be used to draw lessons about macroprudential policy; and, among these lessons, one key aspect relates to the use of capital buffers. The empirical evidence shows that it is precisely during crises when the CCyB and, generally, the instruments that increase capital requirements acquire their full potential via the effects of their release [see Broto and Galán (2020)].