Forward guidance in the UK

Spencer Dale, James Talbot, 13 September 2013

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At its meeting on 1 August 2013, the Monetary Policy Committee (MPC) agreed to provide state-contingent forward guidance concerning the future conduct of monetary policy. The aim was to provide more information to help financial markets, households and businesses understand the conditions under which the current stance of monetary policy would be maintained.

Topics: Monetary policy
Tags: Bank of England, Central Banks, forward guidance, monetary policy

Lessons for rescuing a SIFI: The Banque de France’s 1889 ‘lifeboat’

Pierre-Cyrille Hautcoeur, Angelo Riva, Eugene N. White, 2 July 2014

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In the aftermath of the 2008 financial crisis, the Dodd-Frank Act of 2010 set out to limit the authority of the Federal Reserve to rescue insolvent financial institutions.

Topics: Economic history, Financial markets
Tags: bailout, bank runs, Banque de France, central banking, Central Banks, financial crises, lender of last resort, moral hazard, SIFIs

TARGET balances, Bretton Woods, and the Great Depression

Michael Bordo, 21 March 2014

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During the Eurozone crisis, an analogy was made between the events in Europe between 2007 and 2012 and the collapse of the Bretton Woods System between 1968 and 1971. There has been a build-up of TARGET liabilities since 2007 by some central banks (notably Greece, Ireland, Portugal, and Spain, or the ‘GIPS’), and of TARGET assets by Germany and others.

Topics: Economic history, International finance
Tags: Bretton Woods, Central Banks, ECB, euro, Eurosystem, eurozone, Eurozone crisis, financial crisis, global imbalances, Great Depression, TARGET

Single supervision and resolution rules: Is ECB independence at risk?

Donato Masciandaro, Francesco Passarelli, 21 December 2013

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A successful transition to a European Banking Union requires robust and credible ‘Chinese walls’ between the ECB’s role as monetary authority and any responsibility in the Single Supervisory Mechanism or in the resolution rules. Otherwise, the ECB’s independence would be at risk, given that monetary policy would likely have larger distributional effects.

Topics: EU institutions, Financial markets
Tags: bank resolution, banking regulation, banking union, central bank independence, Central Banks, ECB, global financial crisis

Regulation, supervision and the role of central banks

The Editors, 20 December 2013

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The 2008 Global Crisis consisted of a financial crisis in the North Atlantic economies and a trade and expectations crisis in the rest of the world. Five years on, US and European policymakers as still struggling to put in place regulation and supervision regimes aimed at avoiding future crises.

Topics: Macroeconomic policy
Tags: Central Banks, financial regulation, financial supervision

International cooperation and central banks

Harold James, 8 October 2013

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Tackling the aftermath of a major financial crisis, the origins of which lie in ‘global imbalances’ and whose transmission mechanisms are cross-national, seems prima facie to demand more substantial and institutionalised cooperation. However, in the five years since the collapse of Lehman Brothers, visions of what central banks can and should do have changed profoundly.

Topics: Global crisis, International finance
Tags: Central Banks, Eurozone crisis, global crisis, global imbalances, monetary policy, policy coordination

Independent monetary policies, synchronised outcomes

Espen Henriksen, Finn Kydland, Roman Šustek, 2 October 2013

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The recession in the Eurozone has given new life to optimal-currency-area thinking. The argument goes that the disadvantages of a single currency come from the loss of flexibility and ability to use monetary policy to respond to “asymmetric shocks” (Krugman and Obstfeld 2009).

Topics: Exchange rates, Monetary policy
Tags: capital controls, Central Banks, EMU, exchange-rate policy, inflation, monetary policy

Should Brazil’s central bank be selling foreign reserves?

Márcio Garcia, 25 September 2013

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The US dollar’s rise in August and the Brazilian Central Bank’s (BCB) interventions in forex markets have started a debate about whether the BCB should keep on intervening as it has been doing, mostly via currency derivatives markets, or if it should also be selling its international reserves.

Topics: Exchange rates, International finance
Tags: Brazil, capital flows, Central Banks, derivatives, exchange rates

Enhancing the global financial safety net through central-bank cooperation

Edwin M. Truman, 10 September 2013

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The prospect that the Federal Reserve will soon ease off on its purchases of long-term assets has increased financial-market uncertainty and contributed to a retrenchment in global capital flows. This turbulence has revived discussion of the need to enhance the global financial safety net –i.e.

Topics: Global crisis, International finance
Tags: banking, Central Banks, debt, liquidity

Political challenges of the macroprudential agenda

Jeffrey Chwieroth, Jon Danielsson, 6 September 2013

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A key factor in conquering inflation in the 1980s was the doctrine of central-bank independence. Similarly, the success of the macroprudential agenda also has come to depend on an independent central bank with a credible commitment to implement politically unpopular measures.

Topics: Financial markets, Politics and economics
Tags: Central Banks, credibility, macroprudential

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