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Eugen Tereanu

Macro Prud Policy&Financial Stability

Division

Macroprudential Policy

Current Position

Principal Financial Stability Expert

Fields of interest

Macroeconomics and Monetary Economics,Financial Economics,International Economics

Email

Eugen.Tereanu@ecb.europa.eu

Education
2001-2003

MA in Economics, Johns Hopkins University, U.S.A.

1999-2001

MA in Development Finance and Banking, American University, U.S.A.

1998-1999

MA in American Studies, Babes Bolyai University, Romania

1994-1998

BA in Economics, Babes Bolyai University, Romania

Professional experience
2021-

Principal/Senior Financial Stability Expert, Macroprudential Policy Division, European Central Bank

2020-2021

Senior Financial Stability Expert, Financial Regulation and Policy Division, European Central Bank

2016-2019

Financial Stability Expert, Macroprudential Policy and Financial Stability Surveillance Divisions, European Central Bank

2014-2016

Economist, International Policy Analysis Division, European Central Bank

2009-2014

Economist, European and Finance Departments, International Monetary Fund

Teaching experience
2022-

Joint Vienna Institute - Systemic Macro-Financial Risk Analysis; Real Estate Analysis; Financial Sector Policies; Macroprudential Policy Implementation

27 June 2024
OCCASIONAL PAPER SERIES - No. 352
Details
Abstract
The 2019 revision to the Capital Requirements Directive allowed the systemic risk buffer to be applied on a sectoral basis in the European Union. Since then an increasing number of countries have implemented the new tool, primarily to address vulnerabilities in the residential real estate sector. To inform and foster a consistent understanding and application of the buffer, this paper proposes two specific methodologies. First, an indicator-based approach which provides an aggregate measure of cyclical vulnerabilities in the residential real estate sector and can signal a potential need to activate a sectoral buffer to address them. Second, a model-based approach following a stress test rationale simulating mortgage loan losses under adverse conditions, which can be used as a starting point for calibrating a sectoral buffer. Besides these methodological contributions, the paper conceptually discusses the interaction between the sectoral buffer and other prudential requirements and instruments, ex ante and ex post policy impact assessment, and factors guiding the possible release of the buffer. Finally, the paper considers possible future applications of sectoral buffer requirements for other types of sectoral vulnerabilities, for example in relation to commercial real estate, exposures to non-financial corporations or climate-related risks.
JEL Code
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
G28 : Financial Economics→Financial Institutions and Services→Government Policy and Regulation
3 July 2023
MACROPRUDENTIAL BULLETIN - FOCUS - No. 22
Details
Abstract
Macroprudential policy should remain focused on maintaining capital buffers in the absence of widespread materialisation of financial stability risks. Given that the financial cycle continues to turn, this box provides a general overview of the factors that could inform potential buffer releases in the future and examines indicators and conditions under which buffer releases might be considered.
JEL Code
G01 : Financial Economics→General→Financial Crises
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
17 March 2023
WORKING PAPER SERIES - No. 2795
Details
Abstract
This paper evaluates the resilience benefits of borrower-based macroprudential policies—such as LTV, DSTI, or DTI caps—for households and banks in the EU. To that end, we employ a further developed variant of the integrated micro-macro simulation model of Gross and Población (2017). Besides various methodological advances, joint policy caps are now also considered, and the resilience benefits are decomposed across income and wealth categories of borrowing households. Our findings suggest that (1) the resilience of households improves notably as a result of implementing individual and joint policy limits, with joint limits being more than additively effective; (2) borrower-based measures can visibly enhance the quality of bank mortgage portfolios over time, supporting bank solvency ratios; and (3) the policies’ resilience benefits are more pronounced for households located at the lower end of the income and wealth distributions.
JEL Code
C33 : Mathematical and Quantitative Methods→Multiple or Simultaneous Equation Models, Multiple Variables→Panel Data Models, Spatio-temporal Models
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
G18 : Financial Economics→General Financial Markets→Government Policy and Regulation
15 March 2023
OCCASIONAL PAPER SERIES - No. 310
Details
Abstract
Macroprudential policies since the global financial crisis have been central to safeguarding financial stability. Despite the increasing use of multiple policy instruments, a detailed understanding of interactions among them is still needed to assess how instrument combinations can enhance the effectiveness of macroprudential action. This paper proposes a conceptual framework for informing the choice of combinations of macroprudential instruments, looking at the role of micro and macroeconomic transmission channels, interactions across policy objectives, the importance of country specificities and linkages with other macroeconomic or supervisory policies. It also reviews considerations related to circumvention, leakages, time of activation and communication of policies, all of which may affect the desirability of different combinations of macroprudential instruments. The paper also discusses a possible operational use of combinations of macroprudential instruments to address selected risks and provides a rich analysis of instrument interactions within the categories of borrower-based and, respectively, capital-based measures. The paper concludes that the combinations of capital and borrower-based instruments ensures a comprehensive coverage of different systemic risks and entail important synergies.
JEL Code
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
G28 : Financial Economics→Financial Institutions and Services→Government Policy and Regulation
10 October 2022
MACROPRUDENTIAL BULLETIN - ARTICLE - No. 19
Details
Abstract
Macroprudential measures can effectively support the resilience of households and banks and help tame the build-up of residential real estate (RRE) vulnerabilities. By capping the riskiness of new loans, borrower-based measures contribute to moderating RRE vulnerabilities in the short-term and to increasing the resilience of households over the medium term. By inducing banks to use more equity financing, capital-based measures increase bank resilience in the short and medium term but are unlikely to have a significant dampening effect on RRE vulnerabilities during the upswing phase of a financial cycle. The two categories of measures are mainly complementary and many European countries have therefore implemented them in combination in recent years.
JEL Code
G01 : Financial Economics→General→Financial Crises
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
G28 : Financial Economics→Financial Institutions and Services→Government Policy and Regulation
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
R38 : Urban, Rural, Regional, Real Estate, and Transportation Economics→Real Estate Markets, Spatial Production Analysis, and Firm Location→Government Policy
25 May 2022
FINANCIAL STABILITY REVIEW - BOX
Financial Stability Review Issue 1, 2022
Details
Abstract
This box discusses the transmission mechanisms of macroprudential capital measures and offers important lessons for the assessment of their effectiveness and the design of the capital buffer framework. First, building capital buffers during good times will be effective in increasing banking system resilience, but the muting effect on the build-up of financial imbalances is likely to be limited as bank capital constraints are not usually binding in good times. Second, the economic cost of building capital buffers is also likely to be low when the economy is experiencing an upswing or when banking sector conditions are favourable. Third, the availability and release of capital buffers during crises can effectively support credit supply and economic activity by alleviating potential bank capital constraints when losses materialise. Therefore, enhancing the role of releasable capital buffers within the macroprudential framework and building them up when times are good appears to be a robust policy strategy.
JEL Code
G01 : Financial Economics→General→Financial Crises
E51 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Money Supply, Credit, Money Multipliers
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
22 September 2021
RESEARCH BULLETIN - No. 87.3
Details
Abstract
Many countries have implemented macroprudential policies. The aims are twofold: first, to render the financial system more resilient to shocks and, second, to prevent booms and busts in the financial system in response to economic cycles. This article provides theoretical and empirical evidence which shows the positive impact that these measures have on financial stability, as well as the gains in economic growth derived from a stronger financial system.
JEL Code
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
Network
Research Task Force (RTF)
28 May 2021
WORKING PAPER SERIES - No. 2559
Details
Abstract
Since the global financial crises, many countries have implemented macroprudential policies with the aim to render the financial system more resilient to shocks and limit the procyclicality of the financial system. We present theoretical and empirical evidence on the effectiveness of macroprudential policy, on both, financial stability and economic growth focussing on capital measures and borrower-based measures.
JEL Code
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
Network
Discussion papers
28 May 2021
DISCUSSION PAPER SERIES - No. 15
Details
Abstract
Since the global financial crises, many countries have implemented macroprudential policies with the aim to render the financial system more resilient to shocks and limit the procyclicality of the financial system. We present theoretical and empirical evidence on the effectiveness of macroprudential policy, on both, financial stability and economic growth focussing on capital measures and borrower-based measures.
JEL Code
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
27 March 2019
MACROPRUDENTIAL BULLETIN - ARTICLE - No. 7
Details
Abstract
This article presents the ECB framework for assessing financial stability risks stemming from residential real estate markets and for designing macroprudential policy responses. It reviews recent developments in residential real estate markets and policy initiatives to address risks.
JEL Code
G01 : Financial Economics→General→Financial Crises
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
G28 : Financial Economics→Financial Institutions and Services→Government Policy and Regulation
R30 : Urban, Rural, Regional, Real Estate, and Transportation Economics→Real Estate Markets, Spatial Production Analysis, and Firm Location→General
28 February 2018
WORKING PAPER SERIES - No. 2134
Details
Abstract
We bring together the spatial and global vector autoregressive (GVAR) classes of econometric models by providing a detailed methodological review of where they meet in terms of structure, interpretation, and estimation methods. We discuss the structure of cross-section connectivity (weight) matrices used by these models and its implications for estimation. Primarily motivated by the continuously expanding literature on spillovers, we define a broad and measurable concept of spillovers. We formalize it analytically through the indirect effects used in the spatial literature and impulse responses used in the GVAR literature. Finally, we propose a practical step-by-step approach for applied researchers who need to account for the existence and strength of cross-sectional dependence in the data. This approach aims to support the selection of the appropriate modeling and estimation method and of choices that represent empirical spillovers in a clear and interpretable form.
JEL Code
C33 : Mathematical and Quantitative Methods→Multiple or Simultaneous Equation Models, Multiple Variables→Panel Data Models, Spatio-temporal Models
C38 : Mathematical and Quantitative Methods→Multiple or Simultaneous Equation Models, Multiple Variables→Classification Methods, Cluster Analysis, Principal Components, Factor Models
C51 : Mathematical and Quantitative Methods→Econometric Modeling→Model Construction and Estimation
2022
International Monetary Fund Working Paper 22/65
  • Gross, M., Tressel, T., Ding, X. and Tereanu, E.
2020
Journal of Economic Surveys
  • Elhorst, J.P., Gross, M. and Tereanu, E.
2020
International Monetary Fund Working Paper 20/134
  • Jurca, P., Klacso, J., Tereanu, E., Forletta, M. and Gross, M.
2014
International Monetary Fund Working Paper 14/107
  • Simone, A., Tuladhar, A. and Tereanu, E.
2014
Journal of International Money and Finance
  • Aykut, D., Francis, J. and Tereanu, E.
2010
Oxford Review of Economic Policy
  • Batini, N. and Tereanu, E.
2010
International Monetary Fund Working Paper 10/215
  • Tereanu, E.