THE MACRO-PRUDENTIAL AUTHORITY: POWERS, SCOPE …

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OECD Journal: Financial Market Trends Volume 2011 Issue 2. OECD 2011. THE MACRO-PRUDENTIAL authority : POWERS, SCOPE AND. accountability . by Charles Goodhart*. Abstract Neither the achievement of price stability, via the MPC, nor the application of micro- prudential oversight, via the Financial Services authority (FSA), led to overall financial stability. There is a gap that needs to be filled by a MACRO-PRUDENTIAL authority (M-PA), the Financial Policy Committee (FPC) in the United Kingdom. The only MACRO-PRUDENTIAL instrument used heretofore has been the publication of Financial Stability Reviews (FSR). While worthy, these have been ineffective. The M-PA should have the following powers: First, the power to alter the composition of Central Bank (CB) assets, by adding to (subtracting from) its holdings of claims on the private sector.

the macro-prudential authority: powers, scope and accountability oecd journal: financial market trends – volume 2011 issue2 © oecd 2011 3 1 introduction

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