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The standard macro(prudential) models focus on externalities and treat all prudential instruments as alternative, but equivalent, forms of Pigouvian taxes. This paper explicitly models individual banks' risk choices and shows that different prudential instruments affect banks' risk-taking incentives differently. Thus, conflicts may arise between the micro and macro prudential stance.

Bank Risk Taking --- Banks and Banking Reform --- Debt Markets --- Deposit Insurance --- Economic Theory & Research --- Finance and Financial Sector Development --- Financial Intermediation --- Macroeconomics and Economic Growth --- Macroprudential Regulation