Upon completion of this program, participants will be able to:

• Define macroprudential policy and distinguish it from microprudential and monetary policy.
• Identify the principal policy objectives and the rationale for using macroprudential tools.
• Analyze the mechanics and calibration of various capital-based tools (e.g., CCyB, SIFI buffers).
• Evaluate the effectiveness and transmission channels of borrower-based tools (e.g., LTV and DTI limits).
• Design a policy framework for the governance and activation of the macroprudential toolkit.
• Assess the challenges of policy leakage, circumvention, and unintended consequences.
• Understand the international context and the role of bodies like the **Financial Stability Board (FSB)**.
• Formulate an integrated policy recommendation combining monetary, fiscal, and macroprudential instruments.

• Central Bank Macroprudential Policy and Financial Stability Analysts
• Banking and Securities Regulators
• Government Policy Advisors and Treasury Officials
• Bank Risk Management and Capital Planning Executives
• Academics and Economists specializing in Financial Regulation
• Compliance and Legal Officers in Financial Services

Policy calibration simulation exercises, Group assignments on CCyB activation decision-making, Case studies on LTV/DTI effectiveness, Role-playing macroprudential committee meetings, Structured discussions on policy leakage, Drafting policy communication statements.

Unit 1: Foundations and Institutional Setup

• Defining the "risk to the financial system as a whole" (systemic risk).
• The limitations of monetary policy and microprudential regulation in addressing systemic risk.
• Identifying the two dimensions of systemic risk: time-varying (cyclical) and structural (cross-sectional).
• The potential for regulatory arbitrage and policy leakage.

• Institutional arrangements: vesting macroprudential authority (e.g., Central Bank, separate committee).
• Establishing clear mandates, accountability, and transparency in policy decisions.
• The challenge of political independence and policy traction.
• Mechanisms for coordination with other policy authorities (monetary, fiscal).

Unit 2: The Macroprudential Toolkit

• Mechanics and calibration of the **Countercyclical Capital Buffer (CCyB)**.
• Tools addressing structural risk: buffers for Systemically Important Financial Institutions (SIFI).
• Limits on banks' sectoral exposures (e.g., real estate).
• The use of dynamic provisioning and loan loss reserves.

• Implementation and impact analysis of Loan-to-Value (LTV) limits.
• Debt-to-Income (DTI) and Debt-Service-to-Income (DSTI) restrictions.
• The use of sectoral risk weights and foreign currency loan restrictions.
• Macroprudential tools for liquidity risk (e.g., time-varying Liquidity Coverage Ratio).

Unit 3: Calibration, Activation, and Effectiveness

• Identifying relevant indicators for cyclical risk (e.g., credit-to-GDP gap, asset price growth).
• Quantitative methodologies for setting the optimal level of capital buffers.
• Policy signaling: communicating the rationale for macroprudential action to the public.
• Data requirements and challenges for robust indicator calibration.

• Empirical evidence on the effectiveness of different macroprudential tools.
• Analyzing circumvention channels (e.g., migration to the shadow banking sector).
• Case studies on the use of macroprudential tools in different jurisdictions.
• Reviewing the criteria for timely de-activation of policy measures.

Unit 4: Integration and International Coordination

• Strategies for effective policy mix: monetary policy and macroprudential policy interaction.
• Analyzing the potential for conflict or synergy between the two.
• Coordination with fiscal policy and housing market interventions.
• Integrating macroprudential policy with microprudential supervision.