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Topic: Monetary policy of central banks

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In the News (Sun 16 Jun 19)

  Monetary policy - Wikipedia, the free encyclopedia
Monetary policy is generally referred to as either being an expansionary policy, or a contractionary policy, where an expansionary policy increases the total supply of money in the economy, and a contractionary policy decreases the total money supply.
Monetary policy was seen as an executive decision, and was generally in the hands of the authority with seniorage, or the power to coin.
The establishment of central banks by industrializing nations was associated then with the desire to maintain the nation's peg to the gold standard, and to trade in a narrow band with other gold back currencies.
en.wikipedia.org /wiki/Monetary_policy_of_central_banks   (3801 words)

 FRB: Speech, Ferguson--The Role of Central Banks in Fostering Efficiency and Stability in the Global Financial ...
Central banks have long recognized the effect their words and actions can have on interest rates and asset prices and, as a result, have increasingly moved toward greater transparency in the policy process.
Although central bankers can use predictable policy actions and the forward-looking nature of financial prices to their advantage, they must also be mindful of the potential market reactions to policy actions that are not fully anticipated or that may be misinterpreted.
Fortunately, central banks are aware of these changes and have made great progress in appropriately adapting their approaches to the execution of monetary policy, supervision, and crisis management.
www.federalreserve.gov /boarddocs/speeches/2004/20040517/default.htm   (3483 words)

 Code of Good Practices
Thus, it might be inappropriate for central banks to disclose internal deliberations and documentation, and there are circumstances in which it would not be appropriate for central banks to disclose their near-term monetary and exchange rate policy implementation tactics and provide detailed information on foreign exchange operations.
Monetary and financial policies are interrelated and often mutually reinforcing, with the health of the financial system affecting the conduct of monetary policy and vice versa.
Thus, responsibility for the conduct of bank regulation and supervision or for bank deposit insurance policies in some countries is assigned to the central bank, or to an independent bank supervisory or deposit insurance agency, or split among several units of government.
www.uiowa.edu /ifdebook/hotdocs/Transparency/imfcode.shtml   (4727 words)

 Code of Good Practices on Transparency in Monetary and Financial Policies; Declaration of Principles
Central bank involvement in the rest of the economy (e.g., through equity ownership, membership on governing boards, procurement, or provision of services for fee) should be conducted in an open and public manner on the basis of clear principles and procedures.
Senior central bank officials should be ready to explain their institution's objective(s) and performance to the public, and have a presumption in favor of releasing the text of their statements to the public.
Officials of the central bank should be available to appear before a designated public authority to report on the conduct of monetary policy, explain the policy objective(s) of their institution, describe their performance in achieving their objective(s), and, as appropriate, exchange views on the state of the economy and the financial system.
www.imf.org /external/np/mae/mft/code/index.htm   (4677 words)

 Uncertainty and Transparency in the Conduct of Monetary Policy - Federal Reserve Bank of New York
Central banks have adopted different approaches to this challenge, even as there has been broad convergence toward the model of independent central banks, with explicit mandates that include price stability and greater disclosure and transparency.
In the former case, the implications of the forecast for monetary policy are left implicit.
Transparency in monetary policy cannot mean that the central bank conveys more confidence in the outlook for growth and inflation than it can reasonably have, and it cannot provide more assurance about the likely future course of policy than it actually has.
www.newyorkfed.org /newsevents/speeches/2006/gei060531.html   (2904 words)

 Article: The Fourth Generation of Central Banking   (Site not responding. Last check: 2007-09-10)
The attempts to maintain full employment of the first generation of central banking, the reduction of inflation of the second generation, and the resolution of financial crises in the third all gave central banks the chance to prove themselves (or not) by their performance.
Central banks' information advantage over markets will continue to decline—while central banks' teams of economists tend to remain better forecasters of their domestic economies' performance than their private-sector counterparts, as the source of fluctuation in the economies shifts to the real economy and fiscal politics, that gap will shrink.
Meanwhile, the policy challenge of defining a role for central banks in foreign exchange markets will become even greater, when for the major economies neither foreign exchange rates nor their stability will be a declared priority, nor could it credibly become one given the focus on domestic price stability.
www.iie.com /publications/papers/paper.cfm?researchid=219   (2688 words)

 Central Banking Seminar - Federal Reserve Bank of New York
Twenty years ago, monetary policy typically centered on the control of the money supply or the maintenance of an exchange rate peg—and policy decisions were almost always cloaked in mystery.
The success of disinflationary policies in the past decade raises a new set of issues pertaining to the economy's adaptation to low inflation, the conduct of policy in such an environment, and the prevention of outright deflation.
The central bank is called upon to fill several role in transition economies: financing the public sector, monetary policy, banking regulation and supervision, oversight of the financial system, crisis management, payment services for the private and public sectors, and domestic financial market development.
www.ny.frb.org /banking/centralbank_groups.html   (853 words)

 Central bank - Wikipedia, the free encyclopedia
A central bank, reserve bank or monetary authority, is an entity responsible for the monetary policy of its country or of its group of member states, such as the European Union.
Central banks often have requirements for the quality of assets that may be held by financial institutions; these requirements may act as a limit on the amount of risk and leverage created by the financial system.
Advocates of central bank independence argue that a central bank which is too susceptible to political direction or pressure may encourage economic cycles ("boom and bust"), as politicians may be tempted to boost economic activity in advance of an election, to the detriment of the long-term health of the economy and the country.
en.wikipedia.org /wiki/Central_banks   (3797 words)

 How the independence of central banks affects policy outcomes
The other three are indicators of independence: the rate of turnover of central bank governors, an index based on a questionnaire answered by specialists in 23 countries, and an aggregation of the legal index and the rate of turnover.
Actual, as opposed to formal, central bank independence depends not only on the law, but also on many other less-structured factors---such as informal arrangements between the bank and other parts of government, the quality of the bank's research department, and the personality of key individuals in the bank and the rest of the government.
The policy formulation cluster, which concerns the resolution of conflicts between the executive branch and the central bank over monetary policy and the participation of the central bank in the budget process.
www.worldbank.org /html/dec/Publications/Bulletins/PRBvol3no5.html   (2532 words)

 Monetary policy of Bangladesh
The stimulus provided by monetary policy in accommodating the growth aspirations must not however jeopardise macroeconomic stability and future growth; and the pursuit of monetary policy comprises of various supportive measures to attain the highest sustainable output growth while adjusting smoothly to internal and external shocks that the economy encounters from time to time.
The monetary program is nevertheless very useful as framework for gauging the growth supportiveness and the inflation stabilisation effectiveness of the monetary policy stance pursued.
Monetary and fiscal policies have significant mutual impact, and are therefore formulated and conducted in a mutually consistent and coordinated way with reference to the Medium Tertri Macroeconomic Framework of the NSAPR in attaining the growth, price stability and poverty reduction objectives.
nation.ittefaq.com /artman/publish/article_29681.shtml   (1785 words)

 The custodians of monetary order, by Frédéric Lebaron
The governors of the central banks in the emergent countries, who have often spent some time in the US in the course of their studies or early in their careers, are now suffering the rude shock of seeing the practical results of the abstract economic theories on which they were brought up.
Unlike central bankers elsewhere, the Europeans have often made their careers in the central banks or in the financial administration and they are more strongly influenced by their political allegiances (Christian Democrat or Social Democrat).
There is thus not much reason to believe that the central bankers will do any better than their predecessors in the 1920s when faced with a chaotic crisis of global proportions which the economics textbooks had not really considered and the economists themselves had not anticipated.
mondediplo.com /1998/10/03banks   (1767 words)

 Iran Daily   (Site not responding. Last check: 2007-09-10)
Monetary policy is one of the tools that governments use to influence the economy.
Prescribing a ’tight’ monetary policy as medicine for inflation is counter-productive in the long term.
Primary goal of monetary policy is to maintain the value of the currency to prevent inflation.
www.iran-daily.com /1384/2284/html/focus.htm   (1730 words)

 [No title]   (Site not responding. Last check: 2007-09-10)
Hence, the central bank has an interest in ensuring that certain safety standards are in place that limit the impact of a systemic crisis and therefore reduce the possibility of a disruption of the financial system.
First, in the absence of a binding level of reserve requirements, the demand for central bank balances is no longer determined by the public's demand for transactions and term deposits but, instead, depends on depository institutions' need to hold balances for clearing and settlement purposes.
This means that there is a direct connection between the payments system and monetary policy and implies that institutional changes in the payments system, such as new clearing and settlement methods, may require corresponding changes in monetary policy operating procedures.
www.lycos.com /info/monetary-policy--central-banks.html?page=2   (770 words)

 Monetary policy - Economics bank - Virtual Bank of Biz/ed
Monetary policy is all about the manipulation of interest rates to control the level of inflation.
In this section you can find a simple explanation of what monetary policy is and why we need it.
There is also a little bit of history on how monetary policy has developed in the last 50 years or so.
www.bized.co.uk /virtual/bank/economics/mpol/index.htm   (275 words)

 What central banks can and can't do
Monetary policy targeted at price stability also reduced the economic and social dislocation caused by booms and busts, he said.
"Central banks can not have any substantial effect on trend growth in output or trend growth in employment," and "central banks cannot solve regional, or sectoral, problems," as monetary policy must relate to "the economy as a whole".
Dr Brash said it was the policies of governments that had a material influence on growth and employment, some of the issues being taxation rates, property rights, education, and whether markets were distorted or not.
www.rbnz.govt.nz /news/2001/0102898.html   (320 words)

 EDIRC: Central Banks, Monetary Authorities
Banque Centrale du Luxembourg (Central Bank of Luxembourg), Luxembourg
Bangko Sentral Ng Pilipinas (Central Bank of the Philippines), Manilla
Central Bank of the Republic of Uzbekistan, Tashkent
edirc.repec.org /central.html   (1061 words)

 AEI - Short Publications
During tightenings of monetary policy in 1980, 1987, 1990, 1994, and 2000, the Fed essentially kept raising the fed funds rate until weaker asset markets and/or a fear of a financial accident created a slowdown in demand growth.
That scenario is both benign and desirable for central banks and the economy, provided that it does not include a rapid resurgence in asset markets that boosts aggregate demand growth to levels consistent with still-higher inflation.
With all three major central banks tightening at this stage, and especially with the withdrawal of Japan’s liquidity gusher, asset markets may stabilize and fall by enough to slow aggregate demand growth and keep core inflation from rising above 2 percent.
www.aei.org /publications/pubID.24126/pub_detail.asp   (1934 words)

 Central Banks and Monetary Policy
If the Central Bank were to buy bonds, the effect would be to expand the money supply and hence lower interest rates, the opposite is true if bonds are sold.
Without much debate, the effectiveness of monetary policy, its timing and its eventual impacts on the economy are very obvious.
Insights into monetary policy are very important to the investor since the availability of money and credit are key considerations in the pricing of an investment.
www.greekshares.com /monpol.php   (412 words)

 New York University
The structure of the financial system and the role of central banks are often in the news as countries cope with banking crises or chronic inflation.
Monetary Policy, Banks and Central Banks is an MBA elective course that examines the structure of financial systems from both perspectives.
The first few classes will provide an overview of macroeconomics, banking and monetary policy and will be followed by extensive use of country cases to study specific issues.
pages.stern.nyu.edu /~pwachtel/B302333_F01.htm   (1026 words)

 SSRN-Monetary Policy Rules in Emerging Market Economies: Issues and Evidence by Marc Klau, M. Mohanty
The paper reviews the recent conduct of monetary policy and central banks' interest rate setting behaviour in emerging market economies.
Using a standard open economy reaction function, we test whether central banks in emerging economies react to changes in inflation, output gaps and the exchange rate in a consistent and predictable manner.
Evidence also suggests that in some countries the central bank's response to a negative inflation shock might be weaker than to a positive shock.
papers.ssrn.com /sol3/papers.cfm?abstract_id=901388   (339 words)

 Investing, Central Banks and Monetary Policy
At this time, nations created central banks to establish "monetary authority." This meant that rather than accepting whatever happened to money supply, they would actively try to influence the amount of money available.
Economists debate the finer points of the implementation and effectiveness of monetary policy but one thing is obvious.
At the extremes, monetary policy is a potent force.
www.greekshares.com /centralbank.asp   (401 words)

 CEPR Discussion Paper Abstracts
Firstly, we discuss the conditions under which monetary policy can be expected to affect the economy, both over the medium term and the short term, and review the most policy-relevant empirical results, providing some new evidence.
Secondly, we analyze the implications that the empirical regularities have for the practical conduct of monetary policy.
We focus on whether the existence of short-run real effects can and should be exploited by central banks and whether the impact of monetary policy on the economy may be affected by the present circumstances of low rates of inflation and low nominal interest rates.
www.cepr.org /pubs/dps/DP2241.asp   (268 words)

 Special section on central bank financial independence and policy credibility: introduction. | Finance from ...
One of the most prominent is the high level of financial risk being taken by a number of contemporary central banks in the context of an overall decline in nominal interest rates; that is, in the context of declining central bank profitability.
In one case, Costa Rica, he arrives at the lower inflationary bound beyond which the central bank, as presently structured, would not be able to meet its financial obligations.
In recent years, the Bank's policies have led to an enormous expansion in its balance sheet, to the point where observers both inside and outside the Bank have questioned its capital adequacy.
www.allbusiness.com /finance/530349-1.html   (831 words)

 Tools of Fiscal and Monetary Policy - International Central banks monetary conversion system - Money creation - ...   (Site not responding. Last check: 2007-09-10)
Monetary policy is therefore easy and very complex at the same time.
Without such fiscal measures, all your monetary or budgetary strategies will benefit a more competitive foreign country, just as the United States budgetary policy now benefits more to Chinese than to US firms and workers.
to decrease the monetary mass: by monetary destruction or by higher rates (it is Mr.
occult-advances.org /monet.shtml   (1411 words)

 Central banks monetary policy for  sustainable  regional  economic growth and asset prices stability: ...
Global central banks and government economic planning, fiscal policy play key roles in prudent monetary policy to provide sustainable national and regional (state, provincial, cities) economic growth and asset price stability, healthy regional financial markets trading operations.
Global financial markets and government economic planning, fiscal policy and foreign capital investment are financing the national and regional economic growth, banking industry is directly or indirectly linked to the financial markets operations,
Monetary, economic, fiscal policy impact on asset prices, bubble, cost and accounting system profit/loss simulation, tracking on and off balance sheet entities.
www.osawh.com /centmar.html   (3009 words)

 EconPapers: Fiscal-Monetary Policy Coordination and Central Bank Independence
Essay 1 analyses inflation targeting in an economy with decentralised monetary and fiscal policies and centralised wage setting.
Essay 2 studies inflation targeting in the context of a monetary union.
Essay 3 focuses on Central Bank (CB) institutions and fiscal-monetary policy coordination under debt stabilisation programmes.
econpapers.repec.org /paper/fthbfsefi/e12.htm   (202 words)

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