The European Central Bank has published a blog post arguing that macroprudential policy can support European productivity growth rather than hold it back. The post links stronger productivity outcomes to two functions of macroprudential policy: making the financial system more resilient to crises that disrupt credit and innovation, and leaning against credit booms that steer financing toward less productive real estate activity instead of more innovative firms. It also stresses that simplifying regulation should not be confused with deregulation. The ECB points to macroprudential capital buffers, including the countercyclical capital buffer, as a key tool for building resilience in good times so banks can keep lending through downturns. Citing recent analysis, it says the post-2021 tightening of macroprudential capital buffers in the euro area had only a minimal effect on overall bank credit supply, with lending cutbacks limited to a small number of the most capital-constrained banks. On the borrower side, the post highlights borrower-based mortgage measures, such as income and loan-to-value limits, as a way to restrain risky real estate lending, curb house price excesses and reduce the misallocation of credit away from productive firms. The post adds that macroprudential policy alone will not solve Europe’s productivity problem and that further action is needed to broaden non-bank financing for risky, innovative projects. It points to a more diversified external funding structure, including further progress on capital markets union, while also calling for unnecessary complexity in the macroprudential framework to be addressed without reducing financial system resilience.
European Central Bank2026-07-24
European Central Bank blog argues macroprudential policy can support productivity growth, not weaken it
The European Central Bank, in a blog post, argues that macroprudential policy can help productivity by reducing the damage from financial crises and limiting credit booms that divert lending toward real estate and away from innovative firms. It says recent euro area capital buffer tightening had only minimal effects on overall bank credit supply. The post also calls for simplification without deregulation and for deeper non-bank financing and capital markets development.