Rather, as JFK once said, “the time to repair the roof is when the sun is shining”. By setting the CCyB rate above zero now, we lock in existing excess capital at a time it is relatively cheap (in good times, retain earnings is the main driver of capital increase and the impact of a higher capital requirement on credit and the economy at large is limited is the current circumstances) to be able to absorb futures losses and loosen the regulatory requirement at a time capital is scarcer and the macroeconomic impact of a gap would be significant. 3/4  BIS central bankers' speeches  A number of European countries have taken similar steps to increase their room for manoeuver ahead of a possible future storm. In that context, macroprudential policy is often described as a complement to monetary policy: a policy necessary to remedy the financial stability consequences of very accommodative monetary policy. I would have a more encompassing perspective: macroprudential policy is a complement to monetary policy both today and in the future: by contributing addressing financial buoyancy, it enables monetary policy to be relatively more accommodative today – but the preventive reach of macroprudential policy should not be overestimated, especially while macroprudential authorities are still relatively young and the policy toolkit less sophisticated than that of other policies; more significantly, by building up (macro)prudential room for manoeuvre ahead of the next storm, it also helps restoring monetary room for manoeuvre to address adverse developments.

Moreover, the situation had worsened as it added to the direct impact of weakened global demand. Although the spillover impacts to individual economies have been uneven, monetary policy in most emerging markets have faced a tradeoff between achieving domestic objectives and managing external spillovers. The limited and, in many cases, stretched monetary policy tools have been designed to mitigate financial imbalance and vulnerability, and to restore economic growth and maintain targeted inflation. Our experiences from various Quantitative Easing (QE) episodes remind us that the traditional monetary policy at hand may not be sufficient to address these multiple objectives. Alongside policy interest rate as a primary tool, central banks in emerging markets have additionally relied more on non-traditional, tools and measures. One is macro-prudential policies, mostly related to real estate and the banking sector, to help address pockets of vulnerability in the short-term. The other is a more market oriented approach by allowing greater exchange rate flexibility to counter large and volatile capital flows. Thus far, it is evident that emerging market economies have weathered such spillovers quite well, but new challenges keep coming our way. Despite signs of recovery in some Advanced Economies, their paths remain uneven. This called for the divergence of policy implementations with substantial uncertainty, especially to financial market participants. Next, the prolonged stagnation in some Advanced Economies has taken more tolls on emerging economies as reflected by softening growth and heightening vulnerabilities.