Macro-prudential policies that are deployed in tandem with monetary policy – whereby they complement one another – are more successful at dampening credit cycles than those that act as a substitute for monetary policy, a working paper published by the Bank for International Settlements concludes.

In their paper, Leonardo Gambacorta and Andrés Murcia use loan-level data from five Latin American countries to decipher whether macro-prudential policies have been effective in dampening credit cycles