IMF paper recommends China adopt ‘better-targeted’ macro-prudential policies
Macro-prudential policies "cannot guarantee protection against systemic risk" in China's current economic and finanical environment, according to an IMF working paper published today.
The paper – How effective are macroprudential policies in China? by Bin Wang and Tao Sun – studies data from 171 banks in China. It finds that macro-prudential tools – notable the reserve requirement ratio – are useful in addressing systemic risk, but advocates adopting additional "better-targeted" policies
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