Macro-Financial Policy in an International Financial Centre: The United Kingdom Experience Since the Global Financial Crisis

36 Pages Posted: 4 Feb 2022

See all articles by Thorsten Beck

Thorsten Beck

Florence School of Banking and Finance

Simon Lloyd

Bank of England

Dennis Reinhardt

Bank of England

Rhiannon Sowerbutts

Bank of England

Date Written: January 2022

Abstract

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.

Keywords: cross-border banking flows, international financial centre, macroprudential policy, spillover effects

JEL Classification: F34, G21, G28

Suggested Citation

Beck, Thorsten and Lloyd, Simon and Reinhardt, Dennis and Sowerbutts, Rhiannon, Macro-Financial Policy in an International Financial Centre: The United Kingdom Experience Since the Global Financial Crisis (January 2022). CEPR Discussion Paper No. DP16860, Available at SSRN: https://ssrn.com/abstract=4026743

Thorsten Beck (Contact Author)

Florence School of Banking and Finance ( email )

Florence
Italy

Simon Lloyd

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

HOME PAGE: http://https://sites.google.com/view/splloyd

Dennis Reinhardt

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

Rhiannon Sowerbutts

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

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