The European Systemic Risk Board (ESRB) published two reports on macroprudential stance. The macroprudential stance is a conceptual framework for comparing systemic risks with the policy measures taken to address them. The purpose of this comparison is to arrive at an assessment of whether the macroprudential policy stance of a jurisdiction is neutral, loose or tight.
The assessment of the macroprudential stance may support policymakers in deciding how to address systemic risks. The ultimate objective of macroprudential policy is to contribute to financial stability by strengthening the resilience of the financial system as a whole and counteracting the build-up of systemic risks. To achieve this objective, the ESRB, like other macroprudential authorities, needs to form a view on the macroprudential policy stance on which its risk warnings and policy recommendations are based.
The two reports document the progress made by the ESRB in this area, although further work is required to refine the proposed methods and approaches. In the longer run, assessments of the macroprudential stance also aid communication of macroprudential policy decisions and increase accountability.