The unco-ordinated use of macro-prudential policies may "lead to a 'capital war' that depresses global interest rates", according to a discussion paper published by the Bank of Japan.

In Macroprudential Policies in a Global Perspective, Olivier Jeanne, a professor of economics at Johns Hopkins University, warns that a macro-prudential restriction in one country will "deflect" capital flows to other countries that will, in turn, implement their own macro-prudential restrictions.

"In the unco