scholarly journals UNCONVENTIONAL MEASURES OF MONETARY POLICY: EXPERIENCE OF THE FEDERAL RESERVE SYSTEM OF THE UNITED STATES

2017 ◽  
Vol 16 (3 (2017)) ◽  
pp. 341-364
Author(s):  
Oleksandr Dzyublyuk
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Federal Reserve ◽  
Large Scale ◽  
Banking System ◽  
The United States ◽  
Sustainable Growth ◽  
Unconventional Monetary Policy ◽  
Wide Range ◽  
Strategic Goals

The preconditions, causes and peculiarities of the global financial and economic crisis created the basis for the withdrawal of central banks from their traditional limited range of instruments of monetary influence on the economy and the transition to the active use of unconventional monetary policy measures. The Federal Reserve was the first central bank which used the unconventional measures of monetary policy as a key factor in overcoming the recession and bringing the US economy to a sustainable growth path. The traditional instruments of monetary regulation during the period of aggravation of financial crisis on the money markets turned out complete ineffective, that had the destructive consequences for the economy. That is why so important is the analysis of the reasons for this ineffectiveness and the necessity of use of unconventional instruments. The practical mechanism of using such unconventional instruments of the Fed includes such as large-scale asset purchases and FOMC’s forward guidance about intentions. And it is hard to underestimate the role of these tools in the withdrawal of the American economy from the state of recession. Also important are innovative credit policy programs that have been used by the Federal Reserve during the period of growing crisis, in terms of increasing the effective ness of its impact on the financial stabilization of the banking system, providing markets with liquidity and stimulating domestic demand. The use of unconventional monetary policy instruments aims to achieve a wide range of strategic goals that include not only price stability but also economic growth and low unemployment. Thus, based on the powerful influence of the Fed’s monetary policy on the dynamics of the main economic parameters, it is expedient to apply a dual mandate in formulating the strategic goals of the central bank.

Closing the Monetary Policy Curriculum Gap: A Primer for Educators Making the Transition to Teaching the Fed's Ample-Reserves Framework

FEDS Notes ◽  
2020 ◽  
Vol 2020 (2789) ◽  
Author(s):  
Jane Ihrig ◽  
◽  
Scott Wolla ◽  
Keyword(s):  
United States ◽  
Monetary Policy ◽  
Central Bank ◽  
Federal Reserve ◽  
The United States ◽  
Price Stability ◽  
Over Time

The Federal Reserve (the Fed), the central bank of the United States, has a Congressional mandate to promote maximum employment and price stability. While those goals were articulated in 1977, the approach and tools used to implement those objectives have changed over time.

The Politics of Monetary Policy: A Critical Review

1994 ◽  
Vol 14 (1) ◽  
pp. 57-85 ◽  
Author(s):  
John T. Woolley
Keyword(s):  
United States ◽  
Monetary Policy ◽  
Central Bank ◽  
Federal Reserve ◽  
Critical Review ◽  
The United States ◽  
Central Banks ◽  
Federal Reserve Bank ◽  
Reserve Bank ◽  
Banking Institution

ABSTRACTThe Federal Reserve Bank of the United States is a pre-eminent banking institution, and an institution that has been subject to scrutiny from a wide variety of scholarly perspectives. The object of this article is to review prominent works dealing with the politics of the Federal Reserve, particularly its relations with other institutions and their effects on monetary policy. The review shows that the formal legal independence of a central bank such as the Fed does not mark the end of monetary politics, and its record suggests a greater measure of modesty and caution on the part of enthusiasts for independent central banks.

scholarly journals Central Bank Communication: Forward Guidance

2021 ◽  
Vol 25 (1) ◽  
pp. 160-165
Author(s):  
Vladyslav Sholopak ◽  
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Central Bank ◽  
The United States ◽  
Central Banks ◽  
The European Union ◽  
Information Tools ◽  
Forward Guidance ◽  
Wide Range ◽  
Economic Forecasts

Abstract. Introduction. Incomprehension and misinterpretation of central bank actions by the markets lead to uncertainty. As a result, the volatility of inflation, prices, and assets increases. The low-interest-rate in today’s macroeconomic environment is a common thing. In such circumstances, the economy is so difficult to adapt to internal and external shocks, so inefficiencies caused by incorrect or untimely statements by the regulator can exacerbate the problem and provoke unjustified risks. These new conditions have led to changes in the way information is covered and create a new communication approach. Purpose. Thus, the article aims to systematize the main patterns of forwarding guidance mechanism as a communication tool in monetary policy. Its use in such developed economies as Japan, the United Kingdom, the United States, and the European Union. Identification of major trends in the use of forwarding guidance form during the crises of 2008 and 2020. Determination of why targets are 2% inflation with the description of monetary and communication tools, research of information coverage approaches. Results. The central bank statements affect to decisions of various market participants and can be divided into economic forecasts and forward guidance. According to the forwarding guidance classification, the analysis was made of 2020 statements and compared with the 2008 statements, for each of the studied countries. The finding shows that there has been a shift from economic forecasts to forward guidance. A model consisting of four elements has been identified for the four central banks: target, monetary instruments, statement approach, and information tools. Conclusions. In general, new types such as state-contingent and calendar-based statements began to be used during the last crisis. The most common monetary instrument that appears in statements being the interest rate. The common goals for all central banks are to focus on price stability, which is expressed in inflation of 2%. This target must be long-term and in numerical terms to effectively management inflation expectations and bring down volatility. All banks strive for simplicity and clarity in their statements, and they use a wide range of information tools. Keywords: central bank communicatioт; forward guidance; non-traditional monetary policy instrument.

scholarly journals A SUNSPOT-BASED THEORY OF UNCONVENTIONAL MONETARY POLICY

2020 ◽  
pp. 1-32
Author(s):  
Roger E. A. Farmer ◽  
Pawel Zabczyk
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Financial Markets ◽  
Rational Expectations ◽  
Balance Sheet ◽  
Unconventional Monetary Policy ◽  
Efficient Outcome ◽  
Complete Set ◽  
Pareto Efficient ◽  
Financial Securities

This paper is about the effectiveness of qualitative easing, a form of unconventional monetary policy that changes the risk composition of the central bank balance sheet. We construct a general equilibrium model where agents have rational expectations, and there is a complete set of financial securities, but where some agents are unable to participate in financial markets. We show that a change in the risk composition of the central bank’s balance sheet affects equilibrium asset prices and economic activity. We prove that, in our model, a policy in which the central bank stabilizes non-fundamental fluctuations in the stock market is self-financing and leads to a Pareto efficient outcome.

MONETARY POLICY AND FINANCIAL INTERMEDIATION IN BASEL III: GLOBAL TRENDS

2019 ◽  
Vol 4 (3) ◽  
pp. 39-47
Author(s):  
Larysa BATIUK
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Federal Reserve ◽  
Global Economy ◽  
Financial Intermediation ◽  
Macroeconomic Fluctuations ◽  
Basel Iii ◽  
Banking Supervision ◽  
Basel Committee ◽  
Real Wealth

Introduction. The article deals with the peculiarities of the transmission mechanism of monetary policy in the implementation conditions of the Basel Committee requirements on Banking Supervision "Basel III". The problem of the mechanism violation of the classical monetary multiplier, the imbalance of the monetary circulation system, the frequency increase of debt defaults and the amplitude of macroeconomic fluctuations in the global economic system are marked as a study result of the effects of the credit mitigation policy conducted by the US Federal Reserve amid the global financial crises of the last decade and changes in the nature of financial intermediation based on the synthesis of asset securitization and structured finance instruments. The purpose of this article is to investigate changes in monetary policy and financial intermediation in the implementation context of the Basel Committee on Banking Supervision Basel III as a source of imbalance in the global economy. Research methodology. The system method, method of scientific abstraction, methods of analysis and synthesis, statistical, comparison, generalization, scientific prediction were used. Results. The article deals with the implications of implementing the Basel Committee on Banking Supervision Basel I and Basel II in the area of monetary policy and financial intermediation; peculiarities of monetary multiplier mechanism operation in modern conditions are revealed; the possible consequences of implementing Basel III requirements for the mechanism of monetary supply formation in the world economy are analysed; the change in the role of gold as monetary metal in central bank foreign exchange reserves and the implications of these changes in terms of price dynamics and the distribution of real wealth in the global economy are examined. Conclusions. It is proposed to consider the requirements of the Basel Committee on Banking Supervision "Basel III" as such, which will exacerbate the volatility of global financial markets, increase the likelihood of increasing the frequency of debt defaults and, given the possibility of using gold as a means of redistribution of real wealth in the global economy, will cause an increase in the amplitude of macroeconomic fluctuations. Keywords: monetary policy; financial intermediation; the central bank; US Federal Reserve; Basel III; bank capital structure, monetary base; money multiplier, correspondent accounts; money supply; monetary gold; global economy.

Europäische Zentralbank: kontraproduktive unkonventionelle Geldpolitik und der Euro-Wechselkurs / European Central Bank: counter-productive unconventional monetary policy and the exchange rate

ORDO ◽  
2014 ◽  
Vol 65 (1) ◽  
Author(s):  
Ansgar Belke
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Central Bank ◽  
European Central Bank ◽  
Quantitative Easing ◽  
Unconventional Monetary Policy ◽  
European Central ◽  
The Exchange Rate ◽  
Europäische Zentralbank

ZusammenfassungDie EZB sollte der Versuchung widerstehen, die Deflationsgefahr in der Eurozone durch zusätzliche Varianten unkonventioneller Geldpolitik (z.B. „Quantitative Easing“) zu bekämpfen. Was in den USA oder in Großbritannien geklappt haben mag, wird in der Eurozone nicht funktionieren. Es besteht gar die Gefahr einer Deflationsspirale, wie dieser Beitrag zeigt. Eingebettet werden die Argumente in die aktuelle Debatte um den „zu starken“ Euro.

scholarly journals Unconventional monetary policy of the European Central Bank: A brief recapitulation

2019 ◽  
Vol 53 (3) ◽  
pp. 43
Author(s):  
Ilona Skibińska-Fabrowska
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Central Bank ◽  
Economic Crisis ◽  
Financial Market ◽  
European Central Bank ◽  
Central Banks ◽  
Unconventional Monetary Policy ◽  
European Central ◽  
National Bank

<p>The financial and economic crisis that has hit many economies in recent years has significantly increased the activity of central banks. After using the standard instruments of conducting monetary policy, in view of the obstruction of monetary impulse transmission channels, they reached for non-standard instruments. Among them, asset purchase programs played a signifciant role. The European Central Bank (ECB) launched the largest asset purchase programme (APP) of this type in 2014 and expired in December 2018. The aim of the undertaken activities was to improve the situation on the financial market and stimulate economic growth. The article reviews the literature and results of research on the effects of the program and indicates the possibility of using the ECB’s experience in conducting monetary policy by the National Bank of Poland.</p>

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