Counter-cyclical capital buffers rely on good central bank policy: BoC paper
The stabilisation benefits of counter-cyclical capital requirements depend on the central bank's ability to respond to inflationary and banking risks, according to a Bank of Canada paper published in December.
Ian Christensen, Césaire Meh and Kevin Moran, the paper's authors, develop a macroeconomic framework with banking and bank capital to assess the merits of counter-cyclical bank balance sheet regulation for the stabilisation of financial and economic cycles. The aim of the paper is to
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