How Central Banks Use Macroprudential Tools to Tame Bubbles

In Episode 90 of Monetary Policy Explained with Fexingo, Lucas and Luna explore macroprudential policy — the toolkit central banks use to prevent financial bubbles without raising interest rates for everyone. They dive into a real-world case: Sweden's 2010 experience with household debt, where the Riksbank used a loan-to-value cap on mortgages rather than hiking the policy rate. The episode explains how tools like countercyclical capital buffers, debt-to-income limits, and stress tests work, and why central banks now see macroprudential policy as a critical shield for financial stability. Lucas and Luna discuss the trade-offs — including the risk of regulatory leakage and the challenge of coordinating with monetary policy. A concrete look at how central banks are trying to pop bubbles softly. #MacroprudentialPolicy #CentralBanks #FinancialStability #SwedenRiksbank #LoanToValueCap #CountercyclicalCapitalBuffer #DebtToIncome #HousingBubbles #MonetaryPolicy #Economics #FinancialRegulation #StressTests #SystemicRisk #BaselIII #HousingMarket #FexingoBusiness #BusinessPodcast #EconomicsExplained Keep every episode free: buymeacoffee.com/fexingo