integration and risk sharing in a monetary union ”, financial integration in europe, may. 13 asdrubali et al. find that financial risk - sharing in the united states increased monotonically each decade from the 1960s to the 1990s. see asdrubali, p., sorensen, b. and yosha, o., “ channels of interstate risk sharing : united states 1963 – 1990 ”, the quarterly journal of economics, vol. 111, issue 4, 1 november 1996. 14 see hane, g. ( 1998 ), “ the banking crises of the 1980s and early 1990s : summary and implications ”, in fdic banking review, vol. 11, no 1. 15 ecb calculations based on fdic data. the term “ institution ” refers to a separately chartered commercial bank or savings institution. 16 see krozner, r. and strahan, p. ( 2014 ), “ regulation and deregulation of the u. s. banking industry : causes, consequences, and implications for the future ", in economic regulation and its reform : what have we learned?, national bureau of economic research. 17 see morgan, p., rime, b. and strahan, p. ( 2004 ), “ bank integration and state business cycles ”, the quarterly journal of economics, vol. 119, issue 4, 18 european commission estimates. see nikolov, p. ( 2016 ), op. cit. 19 see milano, v. and reichlin, p. ( 2017 ), “ risk - sharing across the us and emu : the role of public institutions ”, policy brief, luiss school of political economy. 20 tier 1 capital to total assets. 21 ecb ( 2018 ), “ box a : what could enhance private financial risk sharing in the euro area? ”, financial integration in europe. 22 for a more detailed explanation, see ecb ( 2017 ), “ special feature : cross - border bank consolidation in the euro area ”, in financial integration in europe. 23 see carmassi, j. et al. ( 2018 ), “ completing the banking union with a european deposit insurance scheme : who is afraid of cross - subsidisation? ”, occasional paper series, no 208, ecb. 24 this includes guaranteeing the assets or the liabilities of the institution under resolution ; making loans to or purchasing assets from the institution under resolution ; and making contributions to a bridge institution

banks ’ costs which, to a certain extent, are passed on to customers in the form of an increased interest rate margin. this concept can be illustrated in the stylised equation for the lending rate by adding a variable ( ) which designates regulations affecting the interest rate margin : this equation is, of course, a simplification, but it is useful for illustrative purposes. it shows how some static macroprudential instruments, such as increased capital or reserve requirements, will affect the interest rate margin in a “ one - off shift ” when they are introduced, which will affect the transmission mechanism during the period of adjustment. however, there are also likely to be dynamic macroprudential instruments, such as time - varying countercyclical capital buffers, aimed at ensuring that macroprudential policy can influence the availability and pricing of credit throughout the cycle. these time - varying instruments will affect the transmission mechanism on an ongoing basis as they change over time. bis central bankers ’ speeches but the instruments are not perfect substitutes while the effects of monetary and macroprudential instruments may overlap, they are not perfect substitutes. 9 as stated earlier, the macroprudential policy toolkit is likely to include a diverse range of instruments that operate in different ways on different elements of the financial system. and the effect of these instruments on policy objectives other than macroprudential policy will also vary. for example, cross - sectional instruments are less likely to conflict with monetary policy than with the cyclical dimension of macroprudential policy. and instruments aimed at a narrow range of financial institutions or agents will be easier to focus on financial behaviour rather than macroeconomic factors. in general, it is desirable to use instruments with a narrower focus to address specific problems, as they can be better tailored to the problem and will have fewer unintended consequences on the real economy and on other policy objectives. however, there will be times when instruments with a broader scope will be desirable – for example, when there is a danger that developments in the financial system will enable agents to circumvent more narrowly focused instruments. the ability to circumvent instruments forms one of the challenges for macroprudential policy. the effectiveness of macroprudential policy could be strained when the build - up of risks ( for example, an asset price bubble ) in the financial system justifies significant policy intervention to contain the risks but the prevailing macroeconomic conditions do not justify a similarly aggressive monetary policy