Macroprudential policy and cross-border financial flows

Résumé

This article analyzes the relevance of conducting macroprudential policy within a small open economy such as WAEMU. While it remains a key tool for preserving financial stability today, its conduct is nevertheless subject to a certain degree of uncertainty in a world where capital circulates freely. Empirical analyses indicate that macroprudential measures oriented exclusively towards the sources of internal imbalances cannot be fully effective in the presence of cross-border financial flows. It would be appropriate to add an external dimension to macroprudential policy in view of the negative externalities associated with cross-border financial flows.