Macroprudential instruments

Macroprudential instruments aim at mitigating systemic risks in the financial sector and target different macroprudential intermediate goals. Recommendations regarding the use of macroprudential instruments are the most relevant option for the Financial Stability Council (FSC) to take action. In addition, the government and the FMA can partially recommend and decide on the activation of these instruments on their own initiative.

Macroprudential measures can be distinguished based on their transmission mechanism or their type in order to achieve the macroprudential intermediary goals.

• Capital-based instruments: e.g. countercyclical capital buffer, systemic risk buffer, systemically important institutions buffer etc.

• Borrowing-based measures: e.g. cap on loan-to-value (LTV) ratio, debt-service-to-income (DSTI) ratio, debt-to-income (DTI) ratio, limits on loan durations etc.

• Liquidity-based measures: e.g. additional liquidity requirements etc.

These macroprudential instruments address various sources of systemic risks. Subsequently, some macroprudential measures -- illustratively and non-exhaustively -- and their methods are described in more detail. Macroprudential measures are described as simple as possible but as precise as necessary to guarantee the required transparency of macroprudential analyses to financial market participants.