Financial stability is the ultimate goal of macroprudential policy. Banco de Portugal has defined four intermediate objectives to ensure that this utter aim is more easily achieved. To each intermediate objective corresponds an indicative set of macroprudential instruments, as described in the macroprudential toolkit. This list of instruments is regularly evaluated and should not be considered at any moment as closed, as the complexity and ongoing evolution of the financial system may require a revision of the toolkit. Additionally, Banco de Portugal may design other macroprudential measures that it considers as necessary to maintain financial stability.
The Organic Law of Banco de Portugal, the Legal Framework of Credit Institutions and Financial Companies (in Portuguese only) as amended by Decree-Law No. 157/2014 of 24 October, which transposed into national legislation Directive 2013/36/EU (CRD IV), and the Regulation (EU) No. 575/2013 (CRR) provide the legal basis for the implementation of these macroprudential measures.
Relationship between instruments and macroprudential policy intermediate objectives
Macroprudential policy instrument
Mitigate and prevent excessive credit growth and leverage
Mitigate and prevent excessive maturity mismatch and market illiquidity
Limit direct and indirect exposure concentrations
Limit incentives for excessive risk-taking by systemically important institutions
Source: Banco de Portugal
Capital requirements on the current legal framework
*Each institution is required to comply with a combined buffer requirement that corresponds to the sum of the capital conservation buffer, the institution-specific countercyclical capital buffer and the higher of the G-SIIs / O-SIIs buffer and the systemic risk buffer (except when the latter only applies to risk exposures in the EU Member State which activated the measure, in which case it is additive).
Macro-prudential policy strategy (December 2015)
Macro-prudential policy in Portugal: objectives and instruments (December 2014)
A macro-prudential policy for financial stability (November 2013)