Interconnectedness, Innovation And Unintended Consequences: What Macroprudential Policy Can Do To Assess Fragilities Outside Of The Banking Sector − Speech By Randall S. Kroszner, Bank Of England External Member Of The Financial Policy Committee, Given At The Federal Reserve Bank Of Cleveland And Office Of Financial Research’s 2023 Financial Stability Conference

In this speech Randy Kroszner discusses the growth of non-bank financial intermediation since the global financial crisis and the challenges this poses for macroprudential policy. He sets out how the Bank of England’s new System-Wide Exploratory Scenario (SWES) will help us better understand the ways in which, in a stress, the actions of individual firms can interact to exacerbate a shock and potentially generate systemic risk. He argues that this exercise provides a template that could usefully be applied in the US and elsewhere to identify potential sources of systemic risk in the non-bank sector.

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