macroprudential framework

A macroprudential framework is a system used by regulators to oversee the entire financial system and prevent large-scale problems, like financial crises. It focuses on identifying risks that could affect many banks and markets simultaneously, such as excessive borrowing or asset bubbles. By setting rules and monitoring risks proactively, the framework helps ensure the stability of the financial system, protecting the economy and consumers from severe disruptions. Essentially, it’s a safety net that aims to keep the whole financial environment resilient and functioning smoothly.