3Adjustments in bank leverage act as the linchpin in the monetary transmission mechanism that works through 4 fluctuations in risk-taking. In the international context, we find evidence of monetary policy spillovers on cross-5 border bank capital flows and the US dollar exchange rate through the banking sector. A contractionary shock to US 6 monetary policy leads to a decrease in cross-border banking capital flows and a decline in the leverage of international 7 banks. Such a decrease in bank capital flows is…
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