Robert Macrae

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    Brexit will probably cause disruption in markets, but systemic risk is unlikely

Brexit will probably cause disruption in markets, but systemic risk is unlikely

With less than two years until Britain leaves the EU, the implications of Brexit for financial stability are of some concern. Two key central bankers have reached opposites conclusions, with Mark Carney worried and Mario Draghi more sanguine. Broadly in line with Draghi, we think Brexit should mostly decrease systemic risk, albeit with a potential for an increase.

Brexit will […]

Macroprudential policies can backfire

The purpose of macroprudential policies, or ‘macropru’, is to prevent excessive risk accumulating in the financial system, to contain financial crises when they happen, and to ensure the financial system contributes to economic growth.

There are many directions the authorities can take when implementing macropru (e.g. Cerutti et al. 2016). Most are passive, focusing on crisis resolution and fixed rules […]