The Case for Influencing Operational Behaviour in a Macroprudential Approach to Financial Stability

This paper introduces an alternative perspective to the central themes of current literature on macroeconomic resilience and systemic risk in the global financial system. It presents an interdisciplinary discourse centered on evolutionary economics leading to theoretical propositions for a macroprudential approach that is more sensitive to the evolving operational behaviour of system participants, their collective behavioural contributions to the generation of systemic risk, and the recursive effects of regulatory responses on that behaviour. Then the potentials of this approach are explored for emphasizing pre-emptive operational intervention over retrospective regulatory enforcement