Monetary Policy Transmission and Financial Stability in a LIC
Monetary Policy Transmission and Financial Stability in a LIC

Author: Mr.Sohrab Rafiq

Publisher: International Monetary Fund

Published: 2015-11-09

Total Pages: 28

ISBN-13: 1513549138

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This paper explores how monetary policy affects the real economy and its efficacy in promoting financial stability in a large low income country. This paper shows that monetary policy modestly impacts real economic activity and inflation via the bank lending and financial accelerator channels. Second, money market and treasury rates signal changes in the policy stance, while altering banks’ intermediation cost curves due to shifting risk premia. At the same time, evidence points to monetary policy inducing an overshooting in asset prices. These findings suggest that financial stability could be undermined if the calibration of monetary policy is based solely on output and inflation without accounting for the stage of the financial cycle. Finally, the paper discusses policy measures that would enhance the transmission of monetary policy and promote financial stability in Bangladesh.

Evolving Monetary Policy Frameworks in Low-Income and Other Developing Countries
Evolving Monetary Policy Frameworks in Low-Income and Other Developing Countries

Author: International Monetary Fund

Publisher: International Monetary Fund

Published: 2015-10-23

Total Pages: 74

ISBN-13: 1498344062

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Over the past two decades, many low- and lower-middle income countries (LLMICs) have improved control over fiscal policy, liberalized and deepened financial markets, and stabilized inflation at moderate levels. Monetary policy frameworks that have helped achieve these ends are being challenged by continued financial development and increased exposure to global capital markets. Many policymakers aspire to move beyond the basics of stability to implement monetary policy frameworks that better anchor inflation and promote macroeconomic stability and growth. Many of these LLMICs are thus considering and implementing improvements to their monetary policy frameworks. The recent successes of some LLMICs and the experiences of emerging and advanced economies, both early in their policy modernization process and following the global financial crisis, are valuable in identifying desirable features of such frameworks. This paper draws on those lessons to provide guidance on key elements of effective monetary policy frameworks for LLMICs.

The Federal Reserve System Purposes and Functions
The Federal Reserve System Purposes and Functions

Author: Board of Governors of the Federal Reserve System

Publisher:

Published: 2002

Total Pages: 0

ISBN-13: 9780894991967

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Provides an in-depth overview of the Federal Reserve System, including information about monetary policy and the economy, the Federal Reserve in the international sphere, supervision and regulation, consumer and community affairs and services offered by Reserve Banks. Contains several appendixes, including a brief explanation of Federal Reserve regulations, a glossary of terms, and a list of additional publications.

Monetary Transmission Mechanism in the East African Community
Monetary Transmission Mechanism in the East African Community

Author: Mr.Hamid Reza Davoodi

Publisher: International Monetary Fund

Published: 2013-02-06

Total Pages: 59

ISBN-13: 1475553498

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Do changes in monetary policy affect inflation and output in the East African Community (EAC)? We find that (i) Monetary Transmission Mechanism (MTM) tends to be generally weak when using standard statistical inferences, but somewhat strong when using non-standard inference methods; (ii) when MTM is present, the precise transmission channels and their importance differ across countries; and (iii) reserve money and the policy rate, two frequently used instruments of monetary policy, sometimes move in directions that exert offsetting expansionary and contractionary effects on inflation—posing challenges to harmonization of monetary policies across the EAC and transition to a future East African Monetary Union. The paper offers some suggestions for strengthening the MTM in the EAC.

Conditionality in Evolving Monetary Policy Regimes
Conditionality in Evolving Monetary Policy Regimes

Author: International Monetary Fund

Publisher: International Monetary Fund

Published: 2014-05-03

Total Pages: 61

ISBN-13: 1498343694

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With single-digit inflation and substantial financial deepening, developing countries are adopting more flexible and forward-looking monetary policy frameworks and ascribing a greater role to policy interest rates and inflation objectives. While some countries have adopted formal inflation targeting regimes, others have developed frameworks with greater target flexibility to accommodate changing money demand, use of policy rates to signal the monetary policy stance, and implicit inflation targets.

Introduction to Central Banking
Introduction to Central Banking

Author: Ulrich Bindseil

Publisher: Springer Nature

Published: 2021-05-18

Total Pages: 128

ISBN-13: 3030708845

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This open access book gives a concise introduction to the practical implementation of monetary policy by modern central banks. It describes the conventional instruments used in advanced economies and the unconventional instruments that have been widely adopted since the financial crisis of 2007–2008. Illuminating the role of central banks in ensuring financial stability and as last resort lenders, it also offers an overview of the international monetary framework. A flow-of-funds framework is used throughout to capture this essential dimension in a consistent and unifying manner, providing a unique and accessible resource on central banking and monetary policy, and its integration with financial stability. Addressed to professionals as well as bachelors and masters students of economics, this book is suitable for a course on economic policy. Useful prerequisites include at least a general idea of the economic institutions of an economy, and knowledge of macroeconomics and monetary economics, but readers need not be familiar with any specific macroeconomic models.

Inside and Outside Liquidity
Inside and Outside Liquidity

Author: Bengt Holmstrom

Publisher: MIT Press

Published: 2013-01-11

Total Pages: 263

ISBN-13: 0262518538

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Two leading economists develop a theory explaining the demand for and supply of liquid assets. Why do financial institutions, industrial companies, and households hold low-yielding money balances, Treasury bills, and other liquid assets? When and to what extent can the state and international financial markets make up for a shortage of liquid assets, allowing agents to save and share risk more effectively? These questions are at the center of all financial crises, including the current global one. In Inside and Outside Liquidity, leading economists Bengt Holmström and Jean Tirole offer an original, unified perspective on these questions. In a slight, but important, departure from the standard theory of finance, they show how imperfect pledgeability of corporate income leads to a demand for as well as a shortage of liquidity with interesting implications for the pricing of assets, investment decisions, and liquidity management. The government has an active role to play in improving risk-sharing between consumers with limited commitment power and firms dealing with the high costs of potential liquidity shortages. In this perspective, private risk-sharing is always imperfect and may lead to financial crises that can be alleviated through government interventions.

Global Financial Stability Report, April 2012
Global Financial Stability Report, April 2012

Author: International Monetary Fund. Monetary and Capital Markets Department

Publisher: International Monetary Fund

Published: 2012-04-18

Total Pages: 94

ISBN-13: 1616352477

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The April 2012 Global Financial Stability Report assesses changes in risks to financial stability over the past six months, focusing on sovereign vulnerabilities, risks stemming from private sector deleveraging, and assessing the continued resilience of emerging markets. The report probes the implications of recent reforms in the financial system for market perception of safe assets, and investigates the growing public and private costs of increased longevity risk from aging populations.

Monetary Issues in the Middle East and North Africa Region
Monetary Issues in the Middle East and North Africa Region

Author: Mr.Simon Gray

Publisher: International Monetary Fund

Published: 2013-05-10

Total Pages: 176

ISBN-13: 1484349032

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This paper documents the main themes covered in two seminars (December 2011 and September 2012) on monetary policy and implementation at the IMF—Middle East Center for Economics and Finance, and includes country case studies. Against the backdrop of the global financial crisis and swings in cross-border capital flows, operational frameworks have become more flexible, and liquidity management has impacted the relationship between the policy rate corridor and market rates. The balance sheet structure of central banks in the Middle East and North Africa (MENA) shows differences between oil exporters and others, while a few countries have exhibited notable changes since early 2011. Collateral now has a significant financial stability function. Although only one MENA country is part of the G20, implementation of the Basel III bank capital adequacy and liquidity rules will most likely impact banks’ way of doing business in MENA countries, even if indirectly.