•Higher capital requirements imply more aggressive monetary policy.•The countercyclical buffer in Basel III is represented by rule responding to credit.•The buffer and optimal monetary policy deliver extra economic and financial stability.•The buffer and optimal monetary policy dampen the effects of expansionary shocks.•Effects of Basel regulations not evenly distributed among savers, borrowers, banks. The aim of this paper is to study the interaction between Basel I, II and III regulations with monetary policy. In order to do that, we use a dynamic stochastic general equilibrium (DSGE) model with a housing market, banks, borrowers, and savers. Results show that monetary policy needs to be more aggressive when the capital requirement ratio (CRR) increases because it is less effective in this case. However, this policy combination brings a more stable economic and financial system. We also analyze the optimal way to implement the countercyclical capital buffer stated by Basel III. We propose that the CRR follows a rule that responds to deviations of credit from its steady state. We find that the optimal implementation of this macroprudential rule together with monetary policy brings extra financial stability with respect to Basel I and II.