Macroprudential regulation and financial stability High-Level - - PowerPoint PPT Presentation

Macroprudential regulation and financial stability

Vitas Vasiliauskas Chairman of the Board Bank of Lithuania

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High-Level International Forum 1 November 2019, Minsk

Macropru gaining prominence internationally

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Source: IMF

Number of economies that have used macroprudential policy

10 20 30 40 50 60 70 80 90 100 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Advanced Economies Emerging Market and Developing Economies

Institutional shifts at the European level

Differently from pre-crisis years, macroprudential authorities are now mainstream in the EU Comprehensive governance structure was set up National authorities adopt macroprudential measures European Central Bank assesses the measures and if necessary applies

higher requirements European Systemic Risk Board carries out

• versight and issues

recommendations for all EU member states and institutions

Lithuania: pro-active policy stance

Restrictions on loan-to-value ratio Restrictions on debt-service-to-income ratio Restrictions on loan maturity Further limit on debt-service-to-income (introduction of interest rate shock element) Reduction of loan maturity limit Introduction of counter-cyclical capital buffer rate Introduction of domestic systemically important banks‘ capital buffer Bank of Lithuania macroprudential toolkit developments Announced counter-cyclical capital buffer rate in Lithuania (effective in a year after being set)

0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 0,9 1 2015 2016 2017 2018 2019 2011 2011 2011 2015 2015 2015 2015

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Thank you