ECB’s Knot: Must Use Tools of Macroprudential Policy, Also to Counter New Risks

17 October 2023

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Governing Council member Klaas Knot on Tuesday said that macroprudential policy faced evolving challenges.

Speaking at a conference at the ECB, a text of which was posted to the website of De Nederlandsche Bank, which he heads, Knot said that ‘now we are at a stage where the onus lies on actually using the tools and to evaluate their effectiveness and efficiency. Including in the face of new risks.’

Answering questions from the audience, he said that ‘investor protection is not necessarily the same as financial stability’ and that the available tools could be used in a more systematic and wider perspective when there were risks to financial stability.

‘Many of the tools are there and we know them. It’s not that the tools are not well known’, he said, ‘but I think these are all used in the context of investor protection.’

‘We have to get the supervisory community to move in the direction that these tools should actually also be used when there is systemic risk building on the horizon’, he said. ‘So, that’s what I call repurposing of existing tools.’