DP16860 Macro-financial policy in an international financial centre: the United Kingdom experience since the global financial crisis

Author(s): Thorsten Beck, Simon Lloyd, Dennis Reinhardt, Rhiannon Sowerbutts
Publication Date: January 2022
Keyword(s): cross-border banking flows, international financial centre, macroprudential policy, spillover effects
JEL(s): F34, G21, G28
Programme Areas: Financial Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=16860

We describe the macroprudential and monetary policy environment in the United Kingdom (UK). We highlight the UK's position as an international financial centre, and the implications for inward and outward spillover effects of monetary and prudential policy actions. These spillovers pose particular opportunities and challenges for policymakers, and we explain how they have motivated specific developments to the Bank of England's modelling framework. We also present novel empirical evidence that monetary policy actions in the UK have outward spillover effects through cross-border lending that can, in part, be mitigated by macroprudential actions in receiving countries.