Financial stability and systemic risk management in advanced economies and the Pacific Alliance

Abstract

The research deepens the understanding of the importance of having a formal macroprudential policy mechanism focused on safeguarding the soundness of the financial system. Thus, the study examined the approach and powers of Financial Stability Boards for systemic risk management in advanced economies and member countries of the Pacific Alliance. It is a qualitative research based on the description and understanding of the importance of Financial Stability Boards for systemic risk management, for which the grounded theory of financial stability was used. The main result is the identification of Financial Stability Councils that establish regulatory parameters such as the United Kingdom and the United States; while in Mexico, Chile and Colombia, they function as coordination bodies among their members that make recommendations to limit systemic risks. It was concluded that financial stability, being a public good, is a constitutive commitment that promotes social values, and its preservation demands the responsibility of the Financial Stability Councils to promote the general welfare of the population through the elimination or reduction of systemic risk.