The costs to society from the crisis were substantial.1 By 2013, unemployment had risen by 10 million and EU GDP was some 13% below its pre-crisis trend.2 The build-up of excessive leverage in the financial system was a key element leading up to the financial crisis, and policymakers were unable to adequately address systemic risk. While many central banks communicated on financial stability issues prior to the crisis, very few countries had established national macroprudential authorities with a specific mandate and precise instruments for policy action. Some of the tools that we would today call macroprudential instruments were used by central banks in Europe during the post-war period, albeit usually for the purpose of demand management.3 But most were no longer used or were dismantled by financial deregulation during the 1980s and 1990s. And without means of enforcement, warnings published in financial stability reports prior to the crisis often went unheeded. It was only after the crisis that there was widespread recognition of the importance of the macro dimension of financial stability. 4 An internet search on the word “macroprudential” yields 5,000 hits for the eight-year period from 2000 to 2007. By contrast, the past eight years yield 120,000 hits. Despite that recognition, macroprudential policy in Europe was far from operational in 2011. Indeed, when the European rules establishing a common legal basis for macroprudential instruments for banking came into effect in January 2014, ten Member States still had not implemented them in primary national legislation.

See, for example, Crockett, A. (2000), “Marrying the  micro- and macroprudential dimensions of financial stability”, BIS speeches, 21 September; Borio, C (2003), “Towards a macroprudential framework for financial supervision and regulation?”, CESifo Economic Studies, 49: 181–216. 5 See ESRB (2014), op. cit. 6 See, for example, Recommendation of the European Systemic Risk Board of 22 December 2011 on the macro-  prudential mandate of national authorities (ESRB/2011/3); Recommendation of the European Systemic Risk Board of 4 April 2013 on intermediate objectives and instruments of macro-prudential policy (ESRB/2013/1); the ESRB response to the European Commission’s Consultation Document on the “Review of the EU Macroprudential Policy Framework”; and the ESRB handbook on operationalising macroprudential policy in the banking sector. 7 See the ESRB’s website for a breakdown by country. The ESRB’s annual review of macroprudential policy in the  EU provides a detailed description of these measures. 8 Belgium, Denmark, Finland, Luxembourg, the Netherlands and Sweden. 9 Czech Republic, Germany, France, Iceland and Norway. 10 Hellwig, M (2009), “Systemic Risk in the Financial Sector: An Analysis of the Subprime-Mortgage Financial  Crisis”, De Economist, 157(2): 129–207. 11 3/4  BIS central bankers' speeches  11 See ESRB (2018), Macroprudential provisions, measures and instruments for insurance, November. For recent  work on the topic by the European Insurance and Occupational Pensions Authority (EIOPA), see, for example, EIOPA (2019), Discussion Paper on systemic risk and macroprudential policy in insurance, March. 12 ESRB (2019), Features of a macroprudential stance: initial considerations, April. 4/4  BIS central bankers' speeches