maintained. from this angle, the financial sector can be seen to have become more globalised, more complex and more integrated. you will agree that therefore regulation constantly has to adapt to keep up with its changing environment. adopting a systemic view is paramount. with this i mean it is of paramount importance to take due account of the external effects of individual actions and of their repercussions within the financial sector and, ultimately, of their implications for the real economy, sovereigns and taxpayers. in this sense, macroprudential policy provides a framework for thought and action, for deciding how much resilience we want and how much we are willing to pay for it. bis central bankers ’ speeches 2. national dimension : goals and interactions with other policy areas but why do we need a distinct policy? would it not be enough to take system - wide implications into account in other policy areas such as monetary and fiscal policy or microprudential supervision? there are two main arguments why a specific macroprudential policy is called for and both of them i find important. one is set out by nobel laureate jan tinbergen in his contribution “ on the theory of economic policy ” : achieving a number of goals requires an equal number of instruments. for example, setting the interest rate is effective when targeting a specific goal such as inflation. however, using one instrument to try to achieve multiple goals inevitably impairs the effectiveness of that instrument. so even though the interest rate impacts on financial stability, it is likely to clash with the objective of ensuring price stability. moreover, it may be too blunt to achieve this policy goal, especially in a monetary union when risks originate from regions or sectors whose economies are not developing in sync. the second argument : each policy area only should have goals that are not mutually conflicting. would it be wise to make the transport ministry responsible for environmental protection? or would it not be more sensible to have an environment ministry in charge of it? assigning potentially conflicting goals to different policy areas ensures that each policy area is committed to its task. therefore, an independent macro - prudential policy safeguarding financial stability is needed and should be equipped with its own instruments. more precisely, there are two main objectives of macroprudential policy, which should be distinguished carefully. first, it should provide a framework and rules that give the market participants appropriate incentives. this holds true in normal times but especially when crisis management measures have to be applied. second, macroprudential

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