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Greece’s biggest banks may appear to be out of danger, but they are not

Friday, 11 March 2016
article
Liquidity is another problem, points out Miranda Xafa of the Centre for International Governance Innovation, a research institute. Greek banks have around €202 billion in outstanding loans yet only €122 billion in deposits (down from €237 billion in 2009). Deposit-holders pulled out over €40 billion in the first half of last year alone.

Thinking about Equilibrium, Institutions and Governance

Monday, 7 March 2016
blog
The notion that small changes should lead to small changes is a principle of economics and natural philosophy. And, yet, there are many instances in which economic variables do indeed leap from one equilibrium to another. Financial crises, for example, entail large, discontinuous changes in ‘flow’ variables -- investment and output -- even though the underlying ‘state’ variables describing the economy, such as the capital stock, are little changed. The problem for economics is that, while physical capital is the same after the crisis as before, the unemployment produced by the crisis entails a clear welfare loss that is inconsistent with Natura non facit saltum.

Oil Markets Mayhem: An Update

Wednesday, 24 February 2016
blog
Ben Bernanke, the former chairman of the Federal Reserve Board, has an interesting post on his Brookings Institution blog. In it, Bernanke notes that stock markets have closely tracked oil prices over the past five years. His conclusion: "Much of this positive correlation can be explained by the tendency of oil stocks and oil prices to react in the same direction to common factors, including changes in aggregate demand and in overall uncertainty and risk evasion [emphasis added]."

The Impact of Sustainability Codes of Conduct in the Financial Sector

Monday, 22 February 2016
publication
Olaf Weber, Emmanuel Acheta, Ifedayo Adeniyi
This paper analyzes the impact of four major financial sector sustainability codes of conduct, the UN Environmental Programme Finance Initiative, the UN Principles for Responsible Investment, the Equator Principles and the Global Alliance for Banking on Values with regard to their impact on the sustainability of their members.

OECD Warning Signals Flashing on the Track to Recovery

Friday, 19 February 2016
blog
Anyone who has kept up with economic developments since the start of the year knows that the global economy has hit another pothole on the road to recovery. I am tempted to exclaim in exasperation, “Here we go again!” This week the OECD sounded the alarm, warning that global growth in 2016 will likely not exceed its 2015 level. In the face of continued weakness, the OECD has called for international action to support recovery.

La sfida degli investimenti nel mondo senza crescita

Tuesday, 16 February 2016
article
Esiste un duplice filo rosso che lega la crescente turbolenza dei mercati nelle varie regioni del mondo: l'incertezza in aumento sulle prospettive dell'economia mondiale e la difficoltà di assemblare una risposta sistemica a livello internazionale.

The Bank of Canada Loses the Plot on Macroprudential Policy

Tuesday, 16 February 2016
blog
Any follower of Canadian central banking who skipped the speech last week by Bank of Canada Deputy Governor Timothy Lane missed some important clues in the institution’s thinking. Perhaps the most dramatic was Lane’s endorsement of more aggressive fiscal policy. But Lane also talked about financial stability. Anyone hoping the central bank would make a play for more regulatory powers will be disappointed.

Crisis pathologies: Negative interest rates, or more lessons of the 1930s for the 2010s

Friday, 29 January 2016
blog
The Bank of Japan’s (BoJ) made an announcement today that it is joining the European Central Bank (ECB), the Swiss National Bank and the central banks of Denmark and Sweden in charging a negative interest rate on commercial bank reserves. With Japan added to their ranks, countries with negative rates now account for nearly a quarter of the global economy. What is going on here?

Europe’s fashion for negative interest rates now also big in Japan

Friday, 29 January 2016
blog
Negative interest rates could be the biggest cultural export from continental Europe since David Guetta. The Bank of Canada embraced the fad in December when it reset its foreseeable zero lower bound rate to negative 0.5 percent from 0.25 percent. Canada’s central bank hasn’t actually gone there yet. Governor Stephen Poloz left the policy rate at 0.5 percent earlier this month. But fashion-forward Japan showed no such reservations. On Jan. 29, the Bank of Japan took the plunge, setting a rate of minus 0.1 percent on new reserves private lenders stash at the central bank in excess of their regulatory requirements.

Why central bankers should talk more, not less

Wednesday, 20 January 2016
blog
Between June 2013, when he was appointed to the post, and December 2015, Bank of Canada Governor Stephen Poloz uttered barely a word about fiscal policy. Then, on Dec. 8 in Toronto, he broke his silence on the subject, acknowledging in a speech that government spending could play a positive role in saving an economy pushed to the brink.
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