E58 - Central Banks and Their Policies

• Reputational Risk Management in Central Banks

  Staff Discussion Paper 2015-16 Jill Vardy

  This paper discusses reputational risk in the context of central banking and explains why it matters to central banks. It begins with a general discussion of reputational risk within the broader framework of risk management.

  Content Type(s): Staff discussion papers Topic(s): Credibility, International topics, Monetary policy implementation JEL Code(s): E, E5, E52, E58

• Forward Guidance at the Effective Lower Bound: International Experience

  Staff Discussion Paper 2015-15 Karyne B. Charbonneau, Lori Rennison

  Forward guidance is one of the policy tools that a central bank can implement if it seeks to provide additional monetary stimulus when it is operating at the effective lower bound (ELB) on interest rates. It became more widely used during and after the global financial crisis.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Monetary policy and uncertainty, Monetary policy communications, Monetary policy framework, Monetary policy implementation, Monetary policy transmission JEL Code(s): E, E4, E43, E5, E52, E58, E6

• Quantitative Easing as a Policy Tool Under the Effective Lower Bound

  Staff Discussion Paper 2015-14 Abeer Reza, Eric Santor, Lena Suchanek

  This paper summarizes the international evidence on the performance of quantitative easing (QE) as a monetary policy tool when conventional policy rates are constrained by the effective lower bound (ELB). A large body of evidence suggests that expanding the central bank’s balance sheet through large-scale asset purchases can provide effective stimulus under the ELB.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Central bank research, International topics, Monetary policy framework, Monetary policy transmission JEL Code(s): E, E5, E52, E58, E6, E61, E65, N, N1, N10

• The International Experience with Negative Policy Rates

  Staff Discussion Paper 2015-13 Harriet Jackson

  A key issue in the renewal of the inflation-control agreement is the question of the appropriate level of the inflation target. Many observers have raised concerns that with the reduction in the neutral rate, and the experience of the recent financial crisis, the effective lower bound (ELB) is more likely to be binding in the future if inflation targets remain at 2 per cent.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Central bank research, Financial markets, International topics, Monetary policy framework JEL Code(s): E, E5, E52, E58, E6, E65

• The Optimal Level of the Inflation Target: A Selective Review of the Literature and Outstanding Issues

  Staff Discussion Paper 2015-8 Oleksiy Kryvtsov, Rhys R. Mendes

  Bank of Canada research done prior to the most recent renewal of the inflation-control agreement in 2011 concluded that the benefits associated with a target below 2 per cent were insufficient to justify the increased risk of being constrained by the zero lower bound (ZLB) on nominal interest rates.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Inflation targets, Inflation: costs and benefits, Monetary policy framework JEL Code(s): E, E5, E52, E58

• On the Nexus of Monetary Policy and Financial Stability: Recent Developments and Research

  Staff Discussion Paper 2015-7 Oleksiy Kryvtsov, Miguel Molico, Ben Tomlin

  Because financial and macroeconomic conditions are tightly interconnected, financial stability considerations are an important element of any monetary policy framework. Yet, the circumstances under which it would be appropriate for the Bank to use monetary policy to lean against financial risks need to be more fully specified (Côté 2014).

  Content Type(s): Staff research, Staff discussion papers Topic(s): Financial stability, Monetary policy framework JEL Code(s): E, E0, E4, E44, E5, E52, E58, G, G1, G18

• Quantifying Contagion Risk in Funding Markets: A Model-Based Stress-Testing Approach

  Staff Working Paper 2015-32 Kartik Anand, Céline Gauthier, Moez Souissi

  We propose a tractable, model-based stress-testing framework where the solvency risks, funding liquidity risks and market risks of banks are intertwined.

  Content Type(s): Staff research, Staff working papers Topic(s): Financial stability, Financial system regulation and policies JEL Code(s): C, C7, C72, E, E5, E58, G, G0, G01, G2, G21, G28

• Large-Scale Asset Purchases: Impact on Commodity Prices and International Spillover Effects

  Staff Working Paper 2015-21 Sharon Kozicki, Lena Suchanek, Eric Santor

  Prices of commodities, including metals, energy and agricultural products, rose markedly over the 2009–2010 period. Some observers have attributed a significant part of this increase in commodity prices to the U.S. Federal Reserve’s large-scale asset purchase (LSAP) programs.

  Content Type(s): Staff working papers Topic(s): International topics JEL Code(s): E, E5, E58, G, G1, G14, Q, Q0, Q00

• Government and Private E-Money-Like Systems: Federal Reserve Notes and National Bank Notes

  Staff Working Paper 2015-18 Warren E. Weber

  The period from 1914 to 1935 in the United States is unique in that it was the only time that both privately-issued bank notes (national bank notes) and central bank-issued bank notes (Federal Reserve notes) were simultaneously in circulation.

  Content Type(s): Staff research, Staff working papers Topic(s): Bank notes, Digital currencies and fintech, Financial services JEL Code(s): E, E4, E41, E42, E5, E58

• The Efficiency of Private E-Money-Like Systems: The U.S. Experience with National Bank Notes

  Staff Working Paper 2015-3 Warren E. Weber

  Beginning in 1864, in the United States notes of national banks were the predominant medium of exchange. Each national bank issued its own notes. E-money shares many of the characteristics of these bank notes.

  Content Type(s): Staff research, Staff working papers Topic(s): Bank notes, Digital currencies and fintech, Financial services JEL Code(s): E, E4, E41, E42, E5, E58