01798cas a2200253 a 4500 AALejournalIMF016489 230101c9999 xx r poo 0 0eng d 5.00 USD 9781513545332 1018-5941 BD-DhAAL BD-DhAAL Agur, Itai. Will Macroprudential Policy Counteract Monetary Policy's Effects on Financial Stability? / Itai Agur, Maria Demertzis. Washington, D.C. : International Monetary Fund, 2015. 1 online resource (23 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students How does monetary policy impact upon macroprudential regulation? This paper models monetary policy's transmission to bank risk taking, and its interaction with a regulator's optimization problem. The regulator uses its macroprudential tool, a leverage ratio, to maintain financial stability, while taking account of the impact on credit provision. A change in the monetary policy rate tilts the regulator's entire trade-off. We show that the regulator allows interest rate changes to partly "pass through" to bank soundness by not neutralizing the risk-taking channel of monetary policy. Thus, monetary policy affects financial stability, even in the presence of macroprudential regulation. Mode of access: Internet Demertzis, Maria. IMF Working Papers; Working Paper ; No. 2015/283 Full text available on IMF http://elibrary.imf.org/view/journals/001/2015/283/001.2015.issue-283-en.xml IMF e-Library