E58 - Central Banks and Their Policies
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Behaviour in the Canadian large-value payment system: COVID-19 vs. the global financial crisis
Unlike the 2008–09 global financial crisis, the onset of the COVID-19 crisis did not raise stress levels in Canada’s Large Value Transfer System. Swift changes to the Bank of Canada’s collateral policy and its large-scale asset purchase programs likely eased liquidity pressures in the system. -
Complementarities Between Fiscal Policy and Monetary Policy—Literature Review
This paper surveys and summarizes the literature on how fiscal policy and monetary policy can complement each other in stabilizing economic activity. -
Estimating Policy Functions in Payments Systems Using Reinforcement Learning
We demonstrate the ability of reinforcement learning techniques to estimate the best-response functions of banks participating in high-value payments systems—a real-world strategic game of incomplete information. -
Eggs in One Basket: Security and Convenience of Digital Currencies
Digital currencies store balances in anonymous electronic addresses. This paper analyzes the trade-offs between the safety and convenience of aggregating balances in addresses, electronic wallets and banks. -
(Optimal) Monetary Policy with and without Debt
How should policy be designed at high debt levels, when fiscal authorities have little room to adjust taxes? Assigning the monetary authority a role in achieving debt sustainability makes it less effective in stabilizing inflation and output. -
Chinese Monetary Policy and Text Analytics: Connecting Words and Deeds
What are the main drivers behind the monetary policy reaction function of the People’s Bank of China? -
Implementation and Effectiveness of Extended Monetary Policy Tools: Lessons from the Literature
This paper summarizes the literature on the performance of various extended monetary policy tools when conventional policy rates are constrained by the effective lower bound. We highlight issues that may arise when these tools are used by central banks of small open economies. -
2020 US Neutral Rate Assessment
This paper presents Bank of Canada staff’s current assessment of the US neutral rate, along with a newly developed set of models on which that assessment is based. The overall assessment is that the US neutral rate currently lies in a range of 1.75 to 2.75 percent. -
Optimal Quantitative Easing in a Monetary Union
How should a central bank conduct quantitative easing (QE) in a monetary union when regions differ in their size and portfolio characteristics? Optimal QE policy suggests allocating greater purchases from the region that faces stronger portfolio frictions, and not necessarily according to each region’s size.