Macroprudentials : separate from monetary policy or part of it?

The structure of central bank in bank supervision is an important issue on which there is not much focus whereas the independence of central banks for the implementation of monetary policy is well investigated. Recently, especially after the financial crisis, there is an increasing attention from policy makers and academicians about financial regulation and monetary policy responsibility issue. Since the crisis turned to have severe macroeconomic consequences, the financial supervision issue is taken into consideration to revise. In this paper, first I briefly explain the policy objectives of both macroand microprudential regulations. Then, I use a dynamic stochastic general equilibrium model which include separated and integrated responsibilities of financial stability and monetary policy. As macroprudential policy tool, time varying capital requirement ratio is used. Under a DSGE framework, it is hard to see the separation of regulators, however the analyses is done in terms of tools. The results imply that incorporating the central bank into financial stability considerations can help smooth business cycle fluctuations, and decreases the loss resulting from variances of main indicators.