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A Macro-prudential Policy for Financial Stability
The recent financial crisis and its impact on the global economy led the analysis and policies conducted so far for financial stability to be questioned. In this context, there is a general agreement that risks related to excessive financial leverage and to signs of speculative bubbles were largely neglected in the period prior to the crisis. This fact has motivated a profound reform in financial regulation and supervision at the international level, aimed at promoting a more efficient identification and prevention of risks and of the various channels that facilitate their propagation. Macro-prudential policy, aimed at preventing and mitigating systemic risk, has a prominent role in these reforms. In this context, several countries have been developing methodologies and an institutional framework appropriate to the implementation of macro-prudential policy. In several countries, including Portugal, this function has been attributed to the central bank. This article analyses the role of macro-prudential policy in the new policy framework for financial stability and the challenges related to its implementation.