This paper studies the interaction of international shadow banking with monetary and macroprudential policy in a two-country currency union DSGE model. We find evidence that cross-country financial integration through the shadow banking system is a source of financial contagion in response to...

The Single Supervisory Mechanism (SSM) is considered by many to be fundamental for the creation of the European Union banking union. The very idea behind the banking union is not only to strengthen the confidence in the banks of the Member States that are using the euro as their national...