The need for a clear framework for policy coordination has strong roots in theories of economic policy. It is even more salient in macroprudential policymaking given that, as shall be seen in the following chapter, the regulation of uncertainty cannot be “ solved “ by isolated knowledge.

This chapter analyses the potential tension between policy boundaries and coordination. Boundaries that define macroprudential policy as a distinct and specialised policy area are essential to ensure a high insularity of macro prudential authorities from political and industry pressures. Boundaries are also key to forming a defined accountability framework of macroprudential authorities. After all, accountability means the capacity to identify who did what and this may be slightly lost during a coordination process.Yet, systemic problems, in their nature, necessitate a holistic solutionand coordination with other policy areas.This is, of course, not a new contention. It has beenlong acknowledged in the scholarly discourse in public policy that “ Issues are becoming increasingly ‘ cross-cutting ‘ , and do not fit the ministerial boxes into which governments, and policy analysts, tend to place policies. “Boundaries can inhibit this coherence and form barriers to creative and multi-disciplinary thinking (Chapter 9).

The chapter is structured as follows. Section 1 lays out the theoretical foundations for policy coordination as developed by Tinbergen, Theil and others. It provides an insight into the progressing evolution from the classical theory of economic policy to a new theory that operates in a more complicated environment of interactions and strategic games. The section also draws on concepts developed in inter-organisational politics, particularly in relation to public policy organisations. Section 2 explores the interlinkages between macroprudential policy and other traditional policy areas and the possible frictions between their respective objectives, transmission mechanisms and instruments. Understanding these interlinkages is essential in order to choose the appropriate coordination mechanisms of macroprudential policy with other policy areas. It, accordingly, asserts that macroprudential policymaking cannot be conducted in silos.