8. Policy and regulatory responses to the global financial crisis

2016 ◽  
pp. 119-136
Author(s):  
John Goddard ◽  
John O. S. Wilson
Keyword(s):  
Monetary Policy ◽  
Financial Crisis ◽  
Interest Rates ◽  
Historical Perspective ◽  
Global Financial Crisis ◽  
Investment Banking ◽  
Retail Banking ◽  
Specific Policy ◽  
Financial Deregulation ◽  
The Global Financial Crisis

The 2007–09 global financial crisis brought a number of specific policy and regulatory challenges into sharp focus. From an historical perspective, the regulatory response follows a long-established pattern, whereby stricter regulation and supervision is enacted in response to a financial crisis, while pressure leading to financial deregulation tends to mount during times of prosperity. ‘Policy and regulatory responses to the global financial crisis’ describes the evolution of monetary policy and the adoption of quantitative easing. Important developments included the introduction of negative policy interest rates in several countries, setting new capital and liquidity standards, arguments for separating commercial and investment banking, or ring-fencing retail banking divisions from trading or investment banking operations.

Conclusions

2017 ◽  
Author(s):  
Yilmaz Akyüz
Keyword(s):  
Monetary Policy ◽  
Financial Crisis ◽  
Interest Rates ◽  
Global Financial Crisis ◽  
Developing Economies ◽  
Quantitative Easing ◽  
Unconventional Monetary Policy ◽  
Advanced Economies ◽  
The Global Financial Crisis ◽  
Zero Bound

The preceding chapters have examined the deepened integration of emerging and developing economies (EDEs) into the international financial system in the new millennium and their changing vulnerabilities to external financial shocks. They have discussed the role that policies in advanced economies played in this process, including those that culminated in the global financial crisis and the unconventional monetary policy of zero-bound interest rates and quantitative easing adopted in response to the crisis, as well as policies in EDEs themselves....

scholarly journals Monetary policy responses to the global financial crisis: A case study of Egypt

2011 ◽  
Vol 7 (3) ◽  
pp. 65-78
Author(s):  
Monal Abdel-Baki
Keyword(s):  
Monetary Policy ◽  
Financial Crisis ◽  
Interest Rates ◽  
Global Financial Crisis ◽  
Reserve Requirements ◽  
Long Run ◽  
Dynamic Stochastic ◽  
The Global Financial Crisis ◽  
The Arab Spring

Among the triggers of the Arab Spring are the declining living standards of the middle and lower income groups. Undoubtedly, the global financial crisis (GFC) is to be partially blamed for weakening the economies of these nations. But was monetary policy ineffective in combating inflation and reducing the meltdown? This paper employs a dynamic stochastic general equilibrium model to assess the effectiveness of the monetary policy in the wake of the GFC. Egypt is selected as a case study due to its overdependence on imported food, the prices of which are relentlessly soaring. The results of the study reveal that the ideal operating targets for the Central Bank of Egypt are the overnight rate and legal reserve requirements. Interest rates are more suitable for long-run impact on the ultimate goals of growth, price stability and job creation. The study culminates in designing a framework to enhance central bankers’ political independence and transparency, which is imperative for nations with high levels of corruption. The study is not only informative to the new Egyptian policymakers, but also to other developing and emerging economies that suffer from symptoms of chronic inflation and looming socio-political turmoil.

A SAFE MONETARY CENTRAL BANKING POLICY AS A SIGNIFICANT INSTRUMENT FOR LIQUIDITY MAINTENANCE IN THE FINANCIAL SYSTEM

2018 ◽  
Vol 8 (2) ◽  
pp. 123-125
Author(s):  
Dariusz Prokopowicz
Keyword(s):  
Monetary Policy ◽  
Financial Crisis ◽  
Interest Rates ◽  
Global Financial Crisis ◽  
Financial System ◽  
State Intervention ◽  
Developed Countries ◽  
Central Banking ◽  
Financial Crisis Of 2008 ◽  
The Global Financial Crisis

Currently, it is assumed that the global financial crisis of 2008 was effectively mastered and averted several years ago, but its sources have not been fully eliminated. The anti-crisis model of state intervention that was applied during the global financial crisis of 2008 was a modified Keynsian formula known from the 1930s, adapted to the realities of contemporary national economies. The main instrument of anti-crisis policy was the significant development of a mild monetary policy and interventionist measures aimed at reducing the risk of bankruptcy of enterprises and banking entities and stopping the decline in lending in banking systems. In developed countries, anti-crisis interventionist assistance programs for the financial system and pro-active interventionist measures were activated in order to stimulate significantly weakened economic growth. As part of pro-development state intervention activities, the Federal Reserve Bank applied a low monetary policy of low interest rates and a program for activating lending and maintaining liquidity in the financial system by financing the purchase from commercial banks of the most endangered assets. A few years later, the European Central Bank applied the same activities of activation monetary policy.

Determinants of Spot and Forward Interest Rates in Brazil in an International Liquidity Scenario: An Econometric Analysis for the Period 2007-2019

2021 ◽  
Vol 10 (1) ◽  
pp. 19
Author(s):  
Pedro Raffy Vartanian ◽  
Sérgio Gozzi Citro ◽  
Paulo Rogério Scarano
Keyword(s):  
Financial Crisis ◽  
Interest Rates ◽  
Global Financial Crisis ◽  
International Liquidity ◽  
Vector Autoregressive ◽  
International Financial Crises ◽  
International Financial Crisis ◽  
Level Of Activity ◽  
Systemic Crisis ◽  
The Global Financial Crisis

Over the last 25 years, Brazil has been among the countries with the highest interest rates globally. High interest rates have been necessary during several recent times, such as in the period from 1997 to 1999, due to the repeated international financial crises that have plagued the country. From 1999, a sustained path of interest rate reduction begun. With the outbreak of the 2008 international financial crisis, the Brazilian monetary authorities promoted a new round of falling domestic interest rates in response to the recessive effects and the threat of a systemic crisis that could hang over the national financial system. In 2012, a set of interventionist nature policies led to a decrease in the Selic rate. Thus, looking at the last 25 years, it appears that many factors have started to influence the trajectory of Brazilian interest rates. In this context, the present work aims to identify, based on empirical research, the determinants of spot and future interest rates. As a methodology, the research uses a multivariate econometric vector autoregressive model (VAR) with error correction (VEC). The analysis covers the years 2017 to 2019, corresponding to the period in the aftermath of the global financial crisis of 2008. The results evidence that both the spot rate and the DI future can be determined by the fluctuations in the level of inflation and by the level of activity and the real exchange rate, in addition to the effects of the lagged variables themselves.

scholarly journals Confidence in future monetary policy as a way to overcome the liquidity trap

2019 ◽  
Vol 5 (2) ◽  
pp. 117-135
Author(s):  
Olga Kuznetsova ◽  
Sergey Merzlyakov ◽  
Sergey Pekarski
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Large Scale ◽  
Global Financial Crisis ◽  
Time Consistency ◽  
Central Banks ◽  
Time Inconsistency ◽  
Liquidity Trap ◽  
Developed Economies ◽  
The Global Financial Crisis

The global financial crisis of 2007–2009 has changed the landscape for monetary policy. Many central banks in developed economies had to employ various unconventional policy tools to overcome a liquidity trap. These included large-scale asset purchase programs, forward guidance and negative interest rate policies. While recently, some central banks were able to return to conventional monetary policy, for many countries the effectiveness of unconventional policies remains an issue. In this paper we assess diverse practices of unconventional monetary policy with a particular focus on expectations and time consistency. The principal aspect of successful policy in terms of overcoming a liquidity trap is the confidence that interest rates will remain low for a prolonged period. However, forming such expectations faces the problem of time inconsistency of optimal policy. We discuss some directions to solve this problem.

scholarly journals Comparison of the Approach of the Czech National Bank and the European Central Bank to the Effects of the Global Financial Crisis

2021 ◽  
Vol 10 (2) ◽  
pp. 18-46
Author(s):  
Andrea Cecrdlova
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Financial Crisis ◽  
Central Bank ◽  
European Central Bank ◽  
Global Financial Crisis ◽  
Central Banks ◽  
European Central ◽  
National Bank ◽  
The Global Financial Crisis

The latest global crisis, which fully erupted in 2008, can have a significant impact on central banks credibility in the long run. During the last crisis, monetary authorities encountered zero interest rate levels and, as a result, started to use non-standard monetary policy instruments. The Czech National Bank decided to use a less standard instrument in November 2013, when it started to intervene on the foreign exchange market in order to keep the Czech currency at level 27 CZK / EUR. However, the European Central Bank also adopted a non-standard instrument, when chose a path of quantitative easing in 2015 in order to support the euro area economy by purchasing financial assets. The question remains whether the approach of Czech National Bank or the approach of European Central Bank in the crisis and post-crisis period was a more appropriate alternative. With the passage of time from the global financial crisis, it is already possible to compare the approaches of these two central banks and at least partially assess what approach was more appropriate under the given conditions. When comparing the central banks approaches to the crisis, the Czech National Bank was better, both in terms of the rate of interest rate cuts and the resulting inflation with regard to the choice of a non-standard monetary policy instrument. The recent financial crisis has revealed the application of moral hazard in practice, both on behalf of the European Central Bank and the Czech National Bank, which may have a significant impact on their credibility and independence in the coming years.

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