Selected Issues Papers

Macroprudential Policy Calibration for Greece: Simulations for Borrower-Based Measures

Author/Editor:

Marco Gross ; Shiqing Hua ; Mariusz Jarmuzek ; Wei Shi

Publication Date:

February 20, 2024

Electronic Access:

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Summary:

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.

Series:

Selected Issues Paper No. 2024/008

Subject:

Credit Financial institutions Financial sector policy and analysis International organization Loans Macroprudential policy Monetary policy Money Mortgages Prices Real estate prices

Frequency:

Regular