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I study optimal unconventional monetary policy under commitment in a two-country model. Financial intermediaries face occasionally binding financial constraints, which have two important implications. First, central banks should exit from their policy more slowly than the speed of deleveraging in financial sectors. This leads to positive balance sheets of central banks after a crisis. Second, policy commitment induces financial intermediaries to take too much risk in tranquil times, making the economy vulnerable to a financial crisis. On the international dimension, domestic policy entails larger positive spillovers to the foreign country due to financial integration. Cross-country policy cooperation benefits the global economy to the extent determined by the cost of interventions. In noncooperative equilibrium, interventions tend to be too strong in one country but too weak in the other. Finally, I find the simple rule that characterises the Ramsey policy responds to asset price gaps.
