Kovalenko Victoria, Doctor of Economics, Professor, Department of Banking, Odessa National University of Economics, Odessa, Ukraine

ORCID ID: 0000-0003-2783-186X
e-mail: kovalenko-6868@ukr.net

Sheludko Sergii, Candidate of Economic Sciences, Assistant Professor, Department of Banking, Odessa National University of Economics, Odessa, Ukraine

ORCID ID: 0000-0003-0636-4940
e-mail: s.szeludko@gmail.com

Macroprudential Regulation in Ensuring of the Development of Financial Markets

Abstract. Introduction. The study has confirmed that ensuring of financial markets’ development stability is connected with the development of an effective system for macroprudential regulation. The financial crisis has shown that price stability is not enough to ensure financial stability. The financial and business cycles are not synchronized – therefore risks can arise, especially during periods of “disconnection” between two cycles.

Purpose. The aim of the paper is to systematize basic concepts of macroprudential regulation in financial markets, considering international practice of its instruments selection and usage.

Results. It is clarified the approaches to a set of macroprudential instruments formation which depends on the country’s economic development and the vulnerability of a financial sector to internal and external shocks. It has been substantiated that monetary regulation is aimed at ensuring price stability in the market for goods and services. It has been proven that it should not be used to address hotbeds of volatility in asset markets. This is a subject for macroprudential regulation, aimed to ensuring the stability of financial markets and containing systemic risk. It has been identified the factors causing the need to implement the strategy of macroprudential regulation in financial markets to ensure their stable development. They include: systemic risk and financial cycles; considering the importance of a growing market’s credit system and measures to address its risks; the need to increase the transparency of the shadow banking sector; problems in regulating the FinTech branch; international financial standards; the growing role of the central periphery in international finance.

Conclusions. It has been concluded that a powerful macroprudential political mandate and an adequate set of instruments should be given for central banks to solve the problem of increasing financial risks, especially in situations where monetary regulation is adaptive. It has been substantiated the conclusion about the need to develop supervisory and coordination mechanisms in the financial market and the introduction of end-to-end monitoring of systemic risks as a prerequisite for restoring financial stability.

Keywords: financial cycle; financial market; financial stability; macroprudential regulation; systemic risk.

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