Focuses on macroprudential policy coordination in a two-region world, involving major advanced economies (the core) and a group of large or systemically important middle-income countries (the periphery). The model accounts for financial frictions at two levels: between firms and banks in each region, and also between periphery banks and a global bank located in the core region. Macroprudential regulation takes the form of a countercyclical capital buffer. The benefits of international coordination are assessed by solving for the optimal policy responses under alternative policy regimes, including reciprocity—defined as a regime in which capital ratios set in the core are imposed on the global bank’s affiliates abroad.