Policy interactions may drive global banking contraction, BoE economists find
Risk of 'substantial' spillovers, even from relatively small economies
Countries pursuing a combination of unconventional monetary policy and tougher banking regulation may inflict significant spillovers on others as banks cut back their global lending, according to economists at the Bank of England (BoE).
The combination of unconventional policies and higher capital requirements in the UK alone were found to explain about 10% of the global contraction in cross-border lending, as of 2013.
Global lending has been contracting since the financial crisis, undergoing an
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