I solve for optimal macroprudential and monetary policies for members of a currency
union in an open economy model with nominal price rigidities, demand for safe as-
sets, and collateral constraints. Monetary policy is conducted by a single central bank,
which sets a common interest rate. Macroprudential policy is set at a country level
through the choice of reserve requirements. I emphasize two main results. First, with
asymmetric countries and sticky prices, the optimal macroprudential policy has a
country-specific stabilization role beyond optimal regulation of financial sectors. This
result holds even if optimal fiscal transfers are allowed among the union members.
Second, there is a role for global coordination of country-specific macroprudential
policies. Without coordination, members of the union face tighter financial and mon-
etary policies. These results build the case for coordinated macroprudential policies
that go beyond achieving financial stability objectives.