(Mis)managing Macroprudential Expectations explores how central banks predict and govern tail risks that could impact financial stability, using an in-depth case study and empirically-informed theoretical analysis. It asserts that central banks' efforts to capture tail risks go beyond macroprudential policy objectives and highlights the social and political limitations of their new macroprudential approach.

Format: Hardback
Length: 198 pages
Publication date: 20 July 2023
Publisher: Edward Elgar Publishing Ltd

Mis)managing Macroprudential Expectations delves into the intricate methods employed by central banks to anticipate and regulate the potential risks that could jeopardize financial stability. Through a comprehensive case study, the book employs empirically-informed theoretical analysis to capture these low-probability yet high-impact events, offering a novel conceptualization of the role of risk modeling within the macroprudential policy framework.

The book posits that central banks' endeavors to mitigate tail risks extend beyond the primary objectives of identifying and monitoring systemic risks to financial stability. It elucidates how the calculation of tail risk plays a crucial role in shaping the expectations held by regulated institutions regarding the Bank of England's macroprudential approach, its willingness to provide support to struggling institutions, and its utilization of innovative macroprudential policy tools. Moreover, the book situates tail risk within the broader context of climate finance, arguing that the identification of future climate tail risks simultaneously unveils opportunities for private profit and non-bank lending within the financial system, which could potentially destabilize it.

In conclusion, Mis)managing Macroprudential Expectations is a groundbreaking work that offers a multi-faceted perspective on managing macroprudential expectations. Through its transdisciplinary approach, the book caters to the interests of students and scholars engaged in the intersections of climate studies, political science, public policy, environmental economics, banking and finance, and political economy. Its practical applications will also be of immense value to climate and finance policymakers engaged in central banking.

Dimension: 234 x 156 (mm)
ISBN-13: 9781800887589