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Izvestia Journal of the Union of Scientists - Varna. Economic Sciences Series

About the necessity of macroprudential policy

Polina Ivanova

Abstract

When it comes to macroprudential policy, we are inevitably talking about financial stability and systemic risk. It is undeniable that financial stability is an important prerequisite for achieving sustainable economic growth. Therefore governments have long strived to regulate financial institutions in order to ensure their sustainability and ability to perform their duties. Before the global financial crisis of 2008 it was considered that stability could be achieved on the basis of regulation of individual financial institutions. However, the crisis has led to a rethinking of this understanding. It has brought regulators' attention to systemic risk, which is much more than the sum of the individual risks accompanying the activity of financial institutions. As a consequence, the holistic approach has also "sneaked" into financial science and imposed the need to manage risks taking into account the "full picture".

Keywords

global financial crisis, macroprudential policy, macroprudential supervision, systemic risk

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