Vítor Constâncio: Principles of macroprudential policy Speech by Mr Vítor Constâncio, Vice-President of the European Central Bank, at the ECBIMF Conference on Macroprudential Policy, Frankfurt am Main, 26 April 2016. *  *  *  Ladies and Gentlemen, It is with great pleasure that I host this dinner today, in the first edition of our annual Macroprudential Conference, this time jointly organised with the IMF. The Single Supervisory Mechanism Regulation 1 confers upon the ECB and National Competent Authorities or National Designated Authorities specific powers and responsibilities in the field of macroprudential policy. This calls for substantive conceptual and analytical work in this new policy area which is very ambitious, requiring considerable research efforts that we want to stimulate by launching this series of annual conferences. The financial crisis and its aftermath confirmed the need for system-wide surveillance and led to the establishment of macroprudential policy as a new policy area with the objective of addressing systemic risk. At the European Central Bank (ECB), systemic risk is defined “as the risk that financial instability significantly impairs the provision of necessary financial products and services by the financial system to a point where economic growth and welfare may be materially affected”. 2 Important in this concept is the fact that the materialisation of systemic risk brings along significant costs to the real economy – implying the destruction of economic value and leading to losses in terms of economic growth.

But our financial education outreach can progress faster, and reach many more people, if we make the most of our collaborations with the unions, community centres and other organisations are here today. I encourage all of you to work with MoneySENSE to bring financial education to residents in your neighbourhoods, to your workplaces, and to your members. In this regard, I am happy to know that NTUC is planning to organise MoneySENSE programmes for its members. MoneySENSE encourages students to be ambassadors of financial education 11. It is also important to begin young. The Ministry of Education (MOE) has promoted financial literacy in schools so that students get a basic sense of money matters and of the need to save and spend wisely, from young. Financial education messages are taught through subjects such as Social Studies and Civics and Moral Education at the primary and secondary levels. Our teachers have also been given resources and training to enable them to deliver financial literacy lessons effectively. (One of the resources well-received by teachers is a CD-ROM entitled 'Promoting Financial Literacy in Schools' which comprises illustrations and case-studies to facilitate class discussions on financial literacy matters and issues. Workshops focusing on hands-on activities are also conducted annually to enhance teachers' competency in financial literacy.) 12. About 30 schools, through MoneySENSE, have enhanced their financial literacy programmes by conducting enrichment activities. These include interactive board games on prudent money management, workshops on financial matters such as debt, insurance and financial planning and inter-school financial literacy competitions.