LONDON, May 18 (Reuters) - International coordination willbe needed to deal with any negative effects of national attemptsto snuff out asset bubbles, top financial firms said in a WorldEconomic Forum paper.
Asset manager BlackRock, HSBC bank, insurer Generali andothers said in the WEF paper that they back so-calledmacroprudential policy tools being rolled out by central bankson both sides of the Atlantic but urged caution.
Macroprudential policy is relatively new in developedeconomies and refers to using targeted, often temporaryintervention to stop asset bubbles that could destabilise thebroader financial system
New risk watchdogs have been set up in the United States,Britain and the European Union to spot such broader risks,hoping to plug a supervisory gap highlighted by the costly2007-09 financial crisis that few regulators saw coming.
The Bank of England's Financial Policy Committee, forexample, has introduced curbs to cool Britain's mortgage marketin a way that avoids using the much blunter tool of raisinginterest rates.
The paper from the WEF, an international body for debatingeconomic issues, says coordination between such risk watchdogsis becoming critical to limit possible spillovers.
"In addition, it is important to continue to monitor thepossible unintended consequences of these regulations," thepaper, with input from Oliver Wyman consultancy, said. (Reporting by Huw Jones; Editing by Keith Weir)