The usage of macroprudential policies has become an important tool in the development of financial regulations and the mitigation of procyclicality of the financial system. Although the usage of macroprudential tools is considered a positive development, the principles behind its strategies is still being explored. 

In a recent interesting post on the Bank Underground, the authors discuss the objectives of macroprudential policies, in particular the countercyclical capital buffer which enables policymakers to vary banks’ required capital buffers through time, and how it can be modelled.