Modern Banking System as a Source of Cyclic Development of Market Economy

2011 ◽  
pp. 71-81
Author(s):  
A. Rakviashvili
Keyword(s):  
Monetary Policy ◽  
Theoretical Analysis ◽  
Business Cycle ◽  
Market Economy ◽  
Banking System ◽  
Financial System ◽  
Central Banks ◽  
Austrian Theory

The article conducts theoretical analysis of the monetary policy costs. On the basis of the authors interpretation of the Austrian theory of business cycle the article shows the destructive influence of the central banks intervention in the financial system on the economy. It also analyzes market agents response to the monetary policy.

scholarly journals Central banks: Hesitant guardians of equilibrium

2018 ◽  
Vol 68 (s1) ◽  
pp. 125-139
Author(s):  
Jerzy Hausner ◽  
Andrzej Sławiński
Keyword(s):  
Monetary Policy ◽  
Best Practice ◽  
Financial System ◽  
Central Banks ◽  
Budget Constraint ◽  
Soft Budget Constraint ◽  
Intellectual Heritage ◽  
Inherent Tendency

In our paper we focus on situations when central banks have to conduct monetary policy in a world in which they cannot rely fully on what is regarded the best practice and they have to cope with financial system inherent tendency to be unstable. Both phenomena are rooted in János Kornai’s intellectual heritage highlighting that economy tends to divert from equilibrium and that soft budget constraint erodes economic actors’ behavior.

scholarly journals Monetary Theory and Monetary Policy: Reflections on the Development over the last 150 Years

2013 ◽  
Vol 233 (3) ◽  
Author(s):  
Otmar Issing ◽  
Volker Wieland
Keyword(s):  
Monetary Policy ◽  
Financial System ◽  
Central Banks ◽  
The Political ◽  
Monetary Theory ◽  
Academic Discussion

SummaryIn this paper, we provide some reflections on the development of monetary theory and monetary policy over the last 150 years. Rather than presenting an encompassing overview, which would be overambitious, we simply concentrate on a few selected aspects that we view as milestones in the development of this subject.We also try to illustrate some of the interactions with the political and financial system, academic discussion and the views and actions of central banks.

scholarly journals CENTRAL BANK DIGITAL CURRENCY: ECONOMIC AND LEGAL CHARACTERISTICS

2019 ◽  
pp. 94-100
Author(s):  
T.S. Hudima ◽  
V.A. Ustymenko
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Financial Stability ◽  
Banking System ◽  
Legal Framework ◽  
Central Banks ◽  
Digital Currency ◽  
Business Entities ◽  
The Right ◽  
Article 5

The article is devoted to identifying the peculiarities of the central bank digital currency (CBDC), explaining their impact on the monetary policy of the state, and identifying the prospects for the transformation of domestic banking legislation in connection with the implementation of the CBDC. It is noted that the scope of competence of the Central Bank and the legal basis for the issuance of the CBDC will depend on the economic and legal features of the digital currency, the degree of its impact on the monetary policy, the financial stability of the country’s economy and so on. In the process of forming the appropriate legal field and defining the conceptual apparatus in the sphere of emission and circulation of the CBDC, the peculiarities of the use of the latter in economic transactions and the specific functions not inherent in ordinary means of payment should be taken. СBDC initiatives will help: 1) progressively narrow the banking system at the level of the Central Banks (such as the Chicago Plan) by allowing individuals and businesses to deposit directly into the accounts of the Central Banks; 2) increasing confidence of economic entities and individuals in the financial system; 3) strengthening the financial stability of the economy (both domestically and globally). Granting business entities or individuals the right to store digital money directly with the Central Bank can give rise to two main directions of influence on monetary policy: first, to strengthen its transmission mechanism; secondly, lead to banks being disrupted. This may lead to some legal issues regarding (1) the NBU’s area of competence; (2) the constitutional foundations of the legal economic order (Article 5 of the ECU). In particular, it cannot be ruled out that centralization of the production, servicing, and management of the СBDC turnover may violate the principles of competition in business activities, prevent abuse of monopoly position in the market, etc. Keywords: monetary policy, central bank digital currency, financial stability, competence, legal framework, economic operations, issue.

scholarly journals Over- and Underbidding in Central Bank Open Market Operations Conducted as Fixed Rate Tender

2005 ◽  
Vol 6 (1) ◽  
pp. 95-130 ◽  
Author(s):  
Ulrich Bindseil
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Interest Rates ◽  
Banking System ◽  
Central Banks ◽  
General Question ◽  
Open Market ◽  
Short Term ◽  
Fixed Rate ◽  
Proposed Model

Abstract Open market operations play a key role in allocating central bank funds to the banking system and thereby in steering short-term interest rates in line with the stance of monetary policy. Many central banks apply so-called ‘fixed rate tender’ auctions in their open market operations. This paper presents, on the basis of a survey of central bank experience, a model of bidding in such tenders. In their conduct of fixed rate tenders, many central banks faced specifically an ‘under-’ and an ‘overbidding’ problem. These phenomena are revisited in the light of the proposed model, and the more general question of the optimal tender procedure and allotment policy of central banks is addressed.

Digital Money, Liquidity, and Monetary Policy (originally published in July 1997)

First Monday ◽  
2005 ◽  
Author(s):  
Aleksander Berentsen
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Money Supply ◽  
Banking System ◽  
Central Banks ◽  
Electronic Payment ◽  
Regulatory Policies ◽  
Digital Money ◽  
Payment Mechanisms ◽  
Retail Payments

The term digital money refers to various proposed electronic payment mechanisms designed for use by consumers to make retail payments. Digital money products have the potential to replace central bank currency, thereby affecting the money supply. This paper studies the effect of replacing central bank currency on the narrowly defined stock of money under various assumptions regarding regulatory policies and monetary operations of central banks and the reaction of the banking system.

scholarly journals MAIN DIRECTIONS OF CRYPTOCURRENCY INFLUENCE ON THE MONETARY POLICY AND FINANCIAL SAFETY OF BANKING SYSTEMS

2017 ◽  
pp. 152-160
Author(s):  
Oleksandra Vasylchyshyn
Keyword(s):  
Monetary Policy ◽  
Banking System ◽  
Central Banks ◽  
Negative Influence ◽  
Financial Security ◽  
Banking Systems ◽  
Fiat Money ◽  
Analysis And Synthesis ◽  
The Creation ◽  
The Impact

Introduction. The article deals with the peculiarities of the development of the market of cryptocurrency. The main directions of the negative influence of the growth of the capitalization of cryptocurrency market on the monetary policy of the central banks and the financial security of the banking systems are outlined. Possible variants of creation of national cryptocurrencies are investigated. The necessity of introduction of the blockchain system into the practice of organizing of currency turnover and functioning of banking systems is substantiated. Purpose. The article aims to study the impact of the expansion of cryptocurrency on the monetary policy of central banks and the financial security of banking systems. It also aims to work out the recommendations for the implementation of perspective, in our opinion, cryptocurrencies into the national banking system. Methods. In this research we have used the general scientific methods of analysis and synthesis (to understand the functional purpose of cryptocurrencies and to determine the directions of their influence on the monetary policy of central banks and financial security of banking systems); economic and statistical methods (to analyse the dynamics of capitalization of cryptocurrencies, to compare the share of cryptocurrency in the money supply of countries the world); systematic approach (to justify the prospects for the creation of national cryptocurrencies and the introduction of blockchain into the practice of the organization of fiat money circulation and the functioning of banking systems). Results. The main directions and consequences of the influence of cryptocurrencies on monetary policy and financial security of banking systems have been determined. The prospects of the introduction of blockchain into the practice of organization of the circulation of fiat money and the functioning of banking systems, as well as the positive aspects of the creation of national cryptocurrencies have been grounded.

scholarly journals ДІЯЛЬНІСТЬ ЦЕНТРАЛЬНИХ БАНКІВ КРАЇН ІЗ РОЗВИНЕНОЮ РИНКОВОЮ ЕКОНОМІКОЮ

2019 ◽  
pp. 361-368
Author(s):  
Viktoria Dudchenko
Keyword(s):  
Great Britain ◽  
Market Economy ◽  
Financial System ◽  
Central Banks ◽  
European Countries ◽  
Economic Factors ◽  
Modern Development ◽  
The Usa

The economic factors of modern development of the countries with developed market economy, namely Canada, the USA, Japan, Italy, Germany, Great Britain and France, were analyzed. The peculiarities of implementation of monetary policy’s measures by the central banks of the countries with developed market economy were studied and justified. The systematization of the elements of the mechanism for ensuring the financial stabilization by the central banks of the countries with developed market economy was held. The modern branches of ensuring the financial stabilization, namely the project «Greening of Canada’s Bank», were given characteristics to. The measures, used by the central banks of the European countries under investigation in order to prevent the emergence of crisis within financial system, were described

scholarly journals Should Monetary Policy Respond To Asset Price Bubbles? Revisiting the Debate

2008 ◽  
Vol 206 ◽  
pp. 25-34 ◽  
Author(s):  
Sushil Wadhwani
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Asset Prices ◽  
Asset Price ◽  
Financial System ◽  
Central Banks ◽  
Macroeconomic Performance ◽  
Asset Price Bubbles ◽  
Price Bubbles ◽  
Inflation Forecasts

Recent events have highlighted the importance of asset prices to central bank decisions. We argue that, in response to asset price bubbles, central banks should ‘lean against the wind’ (LATW hereafter). Even if the bubbles themselves are not significantly affected by LATW, macroeconomic performance can be improved if monetary policy reacts to asset price misalignments over and above the reaction to fixed horizon inflation forecasts. In addition, it might reduce the probability of bubbles arising at all. This article restates the case for LATW, and reviews the debate. In particular I respond to various criticisms that have been made against LATW and briefly consider alternative policies designed to make the financial system less cyclical.

Afterword

2020 ◽  
pp. 610-628
Author(s):  
Ranald C. Michie
Keyword(s):  
Global Financial Crisis ◽  
Supply And Demand ◽  
Banking System ◽  
Financial System ◽  
Central Banks ◽  
Global Banking ◽  
The Us ◽  
Direct Government ◽  
The Global Financial Crisis ◽  
Global Financial System

The shock to the global financial system in 2020, caused by the coronavirus, provides is a test for the measures taken since the Global Financial Crisis of 2008. The coronavirus has caused a shock to the global economic system, disrupting both supply and demand, and this demands more direct government intervention than central banks are able to provide. Whereas the 2008 crisis was one centred on the global banking system that of 2020 was an event akin to a war, natural disaster, or a political revolution. In turn that had implications for the global financial system as it contained the potential to destabilize banks by threatening the solvency of those to whom they had made loans and extended credit. To forestall such an event central banks are called upon to act as lenders of last resort, particularly the Federal Reserve, as it was the only one capable of supplying the US$s on which all banks relied when making and receiving payments, and borrowing and lending, among themselves. From the outset that response appears to have learned lessons from the mistakes of the 2008 crisis, in terms of speed, scale, and co-ordination, while the global banking system is far more resilient.

scholarly journals CONVENTIONAL AND UNCONVENTIONAL MONETARY POLICY. THE CASE OF ROMANIA

2016 ◽  
Author(s):  
Ioana Plescau
Keyword(s):  
Monetary Policy ◽  
Financial Crisis ◽  
Credit Risk ◽  
Interest Rates ◽  
Banking System ◽  
Central Banks ◽  
Unconventional Monetary Policy ◽  
National Bank ◽  
Recent Financial Crisis ◽  
The Relationship

The aim of our paper is to analyze the conventional and unconventional monetary policy in Romania, in the context of the recent financial crisis. We study the relationship between interest rates and credit risk, but also the non-standard monetary measures that were adopted by the National Bank of Romania and their impact on the banking system. Our results point to a decrease of interest rates in the years after the crisis, which is in line with the majority of central banks that have reduced monetary rates in order to sustain the economy and the credit activity.

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