IMF paper explores interaction of capital controls and macro-pru

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Implementing capital controls alongside macro-prudential measures does not necessarily mitigate cross-border spillovers, according to a paper published by the International Monetary Fund.

Eugenio Cerutti and Haonan Zhou analyse the joint impact of macro-prudential and capital control measures on cross-border banking flows, concluding both have “interesting” spillover effects due to “circumvention” or arbitrage.

“For macro-prudential policies, the overall usage in lender countries reduces

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