Macroprudential policies are regulatory frameworks aimed at overseeing and mitigating systemic risks in the financial system as a whole, rather than focusing on individual institutions. These policies address factors such as excessive credit growth, asset bubbles, and interconnectedness among financial institutions to promote stability and prevent financial crises. By implementing macroprudential measures, regulators seek to safeguard the economy from widespread disruptions that can arise from the behavior of financial markets and institutions.
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