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Macroprudential Policy Calibration for Greece: Simulations for Borrower-Based Measures
Author:
Marco Gross https://isni.org/isni/0000000404811396 International Monetary Fund

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,
Shiqing Hua
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Mariusz Jarmuzek
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Wei Shi
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Series:
Selected Issues Papers
Volume/Issue:
Volume 2024: Issue 008
Language:
English
Publication Date:
20 Feb 2024
DOI:
https://doi.org/10.5089/9798400267383.018
ISBN:
9798400267383
ISSN:
2958-7875
Pages:
20
Keywords:
Greece; macroprudential policy; borrower-based measures; household micro data and modeling; policy simulation; D. policy calibration; C. MACROPRUDENTIAL policy option; LTV cap; Real estate prices; Credit; Loans; Mortgages; Global
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IMF Selected Issues Papers are prepared by IMF staff as background documentation for periodic consultations with member countries. It is based on the information available at the time it was completed.
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The Greek financial system has remained resilient underpinned by strengthening banks’ balance sheets, but still faces significant challenges ahead including the re-emergence of imbalances in the real estate market. Recognizing these imbalances, the authorities have recently introduced the necessary legal framework for setting borrower-based measures (BBMs), paving the way to activate both income- and collateral-based measures in near term. Simulations, which employ a quantitative framework combining micro- and macro-level data, show that BBMs would help enhance household resilience, with synergies when caps on debt service-to-income (DSTI) and loan-to-value (LTV) ratios are jointly implemented, leading over time to the more resilient banking system against potential risks. Caps could initially be set at less binding levels and gradually tightened based on a systemic risk assessment.
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Cover Selected Issues Papers
Selected Issues Papers
Publisher:
International Monetary Fund