A better understanding of the operational overlap between monetary and macroprudential tools is necessary to ensure the effective transmission of monetary policy, according to a Central Bank of Brazil paper published on Tuesday.

Pierre-Richard Agénor and Luiz Pereira da Silva, the paper's authors, present a simple dynamic macroeconomic model of a bank-dominated financial system that captures some of the key credit market imperfections commonly found in middle-income countries, to analyse the