A Macro-Prudential Regulation to Make Value Creation Really Sustainable?

To discuss the potential and conditions of validity of macro-prudential policies for supporting long term wealth creation, the paper discusses the two dimensions that have now become standard, namely the search for financial stability at every point-in-time, which is the prevention of contagion within the financial system, and the objective of financial stability over-time, i. e. the reduction of the pro-cyclical nature of the financial system. The first approach is illustrated by the new scheme for the identification of Global Systemically Important Financial Institutions (G-SIFIs), elaborated by the Financial Stability Board and the Basel Committee. The second approach presents the micro-prudential mechanisms that have been developed to reduce the risk of pro-cyclicality of prudential regulation but also the macro-prudential instruments that have been put forward in order to provide the proper incentives to financial institutions in order to contribute to long-term growth. The paper also concludes by insisting on the further work still necessary in order to better articulate all the macro-prudential tools currently proposed, as well as the need to make strategic choices and to be able to review them, as more experience is gained with the concrete implementation of those instruments.