BoE-HKMA-IMF Conference on Monetary, Financial and Prudential Policy Interactions in the Post-Crisis World

MONETARY, FINANCIAL AND PRUDENTIAL POLICY INTERACTIONS
IN THE POST-CRISIS WORLD
2016 Programme

Dates: 24-25 October 2016
Location: Hong Kong Monetary Authority

The regulatory and monetary policies initiated over the last eight years have led to a rise of non-bank intermediation of credit, both in advanced and emerging economies. This poses two sets of challenges. First, what are the implications of post-crisis changes in the financial system for the transmission mechanism of monetary policy, and for macroprudential and microprudential policy? And second, what are the international ramifications of domestic monetary policies and are there ways in which macroprudential policies should be coordinated across borders in order to contain any risks to global financial stability?

The first day of the conference will be research-focused, with speakers from academia and policy organizations discussing their recent research on the topics below. The second day will comprise closed-door roundtable discussions with a focus on the prospective policy response.

Programme of 24 October 2016

Sessions 1 and 2: A changing financial system, the implications of non-bank activities on the transmission of monetary policy

The first day will take stock of what we know about the monetary policy transmission mechanism in light of the post-crisis regulatory reforms and the growing non-bank intermediation of credit. For instance, the relative importance of various channels through which monetary policy is transmitted (e.g., the bank credit channel or the risk-taking channel) may have changed, requiring new policy responses or instruments.

• Which channels of monetary policy transmission are particularly affected?
• What does this mean for the impact of a further easing in monetary policy; the eventual unwinding of unconventional monetary policy; and the operation of monetary policy in ‘normal’ times?
• How is the growing relative importance of non-bank financial intermediation affecting the monetary transmission mechanism?
• What are the implications of non-bank activities on the mix of monetary and prudential policies?

This session will address the implications of the rise of non-bank activities for systemic risk and the use of various policies to contain it.

• Are there non-bank activities that give rise to significant externalities that might lead to systemic risk (such as procyclicality, market liquidity, leverage, and interconnectedness)?
• To what extent do data limitations hinder assessment of whether there is a need to extend the perimeter of regulation?
• Under the existing or a widened regulatory perimeter, what might be the role for microprudential policy and supervision versus macroprudential policies in tackling risks from non-bank activities? Some tools to consider could include redemption gates in relation to asset managers; time-varying liquidity requirements for banks and/or non-banks; countercyclical margin requirements; and resolution regimes for CCPs and insurers.
• What are the implications of non-bank activities on the mix of monetary and prudential policies?