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Bank of Canada staff discussion papers are completed staff research studies on a wide variety of subjects relevant to central bank policy, produced independently from the Bank’s Governing Council. This research may support or challenge prevailing policy orthodoxy, and the views expressed are solely those of the authors, not the Bank. The paper "On the Nexus of Monetary Policy and Financial Stability: Effectiveness of Macroprudential Tools in Building Resilience and Mitigating Financial Imbalances" by Evren Damar and Miguel Molico reviews Canadian and international evidence on the effectiveness of macroprudential policy measures. The analysis concludes that these measures have broadly achieved their goal of increasing the financial system's resilience to imbalances and adverse shocks, but evidence of their effectiveness in providing countercyclical stabilization by curbing credit growth is limited. Sectoral macroprudential tools, particularly those targeting borrowers, are more effective in leaning against the financial cycle. The observed effectiveness of macroprudential tools implies they can be complementary to monetary policy in achieving macroeconomic and financial stability.