Regulation of banks and financial institutions to avoid a crisis similar to the Financial Crisis of 2007-2008 has been a theme of financial regulation and much research. Much of the research has been explicitly designed to affect regulatory policy. In this article, I take a step back and...

We examine macroprudential bank capital policy in a macroeconomic model with a financial accelerator originating in the banking sector. Under Ramsey-optimal policy, the bank capital buffer tracks closely a model-based measure of the credit gap, defined as the gap between equilibrium credit in...

Financial supervision focuses on the aggregate (macroprudential) in addition to the individual (microprudential). But an agreed framework for measuring and addressing financial imbalances is lacking. We propose a holistic approach for the financial system as a whole, beyond banking. Building on...