There is generally consensus among macroeconomists that monetary policy works best when it is systematic. Following the financial crisis, the US Federal Reserve shifted from long-term, systematic policy to short-term goals targeting unemployment. This column argues that, while these were appropriate in the aftermath of the downturn, such policy accommodations have been pursued for too long since. The need for a somewhat accommodative policy cannot be used to defend the current non-systematic policy and excessive emphasis on short-term employment gains.
Athanasios Orphanides, Wednesday, November 11, 2015 - 00:00
Jakob de Haan, Wijnand Nuijts, Mirea Raaijmakers, Friday, November 6, 2015 - 00:00
The Global Crisis revealed serious deficiencies in the supervision of financial institutions. In particular, regulators neglected organisational culture at the institutional level. This column reviews efforts since 2011 by De Nederlandsche Bank to oversee executive behaviour and cultures at financial institutions. These measures aimed at identifying risky behaviour and decision-making processes at a sufficiently early stage for appropriate countermeasures to be implemented. The findings show that regulators can play a larger part in securing the stability of the financial system by taking an active role in shaping institutional cultural processes.
Dirk Niepelt, Wednesday, January 21, 2015 - 00:00
Charles Wyplosz, Friday, September 12, 2014 - 00:00
Karl Walentin, Thursday, September 11, 2014 - 00:00
Marcus Miller, Lei Zhang, Wednesday, September 10, 2014 - 00:00
Stephen Golub, Ayse Kaya, Michael Reay, Monday, September 8, 2014 - 00:00
Pierre-Cyrille Hautcoeur, Angelo Riva, Eugene N. White, Wednesday, July 2, 2014 - 00:00
The key challenge for lenders of last resort is to ameliorate financial crises without encouraging excessive risk-taking. This column discusses the lessons from the Banque de France’s successful handling of the crisis of 1889. Recognising its systemic importance, the Banque provided an emergency loan to the insolvent Comptoir d’Escompte. Banks that shared responsibility for the crisis were forced to guarantee the losses, which were ultimately recouped by large fines – notably on the Comptoir’s board of directors. This appears to have reduced moral hazard – there were no financial crises in France for 25 years.
Stefano Ugolini, Sunday, December 11, 2011 - 00:00
While many central bankers feel they are now in unchartered territory, this column argues that history may provide guidance. Going back to a time before central banks, it argues that there are long-term cycles in the evolution of monetary policy – governments have alternatively internalised and externalised money creation. The key to success is not who runs monetary policy, but how credible they are.
Barry Eichengreen, Eswar Prasad, Raghuram Rajan, Tuesday, September 20, 2011 - 00:00
Central banks have massively broadened their remit in recent crisis-laden years, but the standard analytic framework – ‘flexible inflation targeting’ – has not changed. This column argues that it is time to properly flesh out an alternative framework. Financial stability should be an explicit mandate of central banks, and international coordination among central banks should be boosted by forming a small group of systemically significant central banks that regularly meets and issues reports to the G20 on their financial-stability policies.