In a low interest rate environment, loosening monetary policy can backfire and cause a recession. A study using a model of the euro area economy found that when interest rates go too low, monetary policy can actually start hurting the economy. This happens because banks may not be able to make enough money to lend out. To prevent this, a new approach called macroprudential policy can be used. By requiring banks to save money during good times, this policy can reduce the risk of hitting the point where low interest rates stop working. This shows that combining different policies can make them more effective in keeping the economy stable.