BIS paper examines potential substitute monetary policy tools
A working paper, published by the Bank for International Settlements this month, discusses the possible substitutes for traditional monetary policy tools in achieving the financial stability goal of central banks.
Particular attention is given to the potential for capital adequacy requirements and interest rate policy to act as alternative instruments.
Authors Stephen Cechetti and Marion Kohler, construct a macroeconomic model to illustrate that capital adequacy and interest rate policies can be
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