Macro-prudential policy must give guidance on how to deleverage, paper says
Economic context must be taken into account by policy-makers, researchers argue
Macroprudential policy-makers must give concrete guidance to banks on how they should move towards higher capital, a working paper published by the European Central Bank says.
In The impact of bank capital on economic activity – evidence from a mixed-cross-section GVAR model, Marco Gross, Christoper Kok and Dawid Zochowski study the effect of shocks to bank capital on the economy. They construct a model for the 28 economies in the European Union and their central banks, as well as for a sample
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