E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit

• CBDC and Monetary Sovereignty

  Staff Analytical Note 2020-5 Antonio Diez de los Rios, Yu Zhu

  In an increasingly digitalized world, issuers of private digital currency can weaken central banks’ ability to stabilize the economy. By continuing to make central bank money attractive as a payment instrument in a digital world, a central bank digital currency (CDBC) could help to maintain a country’s monetary sovereignty.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Digital currencies and fintech, Monetary policy JEL Code(s): E, E5, E52, E58, F, F5, F55, G, G1, G15

• CBDC and Monetary Policy

  Staff Analytical Note 2020-4 Mohammad Davoodalhosseini, Francisco Rivadeneyra, Yu Zhu

  Improving the conduct of monetary policy is unlikely to be the main motivation for central banks to issue a central bank digital currency (CBDC). While some argue that a CBDC could allow more complex transfer schemes or the ability to break below the zero lower bound, we find these benefits might be small or difficult to realize in practice.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Digital currencies and fintech, Monetary policy, Payment clearing and settlement systems JEL Code(s): E, E4, E41, E5, E51, E52

• The Effect of Mortgage Rate Resets on Debt: Evidence from TransUnion (Part I)

  Staff Analytical Note 2020-2 Katya Kartashova

  This note studies how decreases in mortgage rates affect the behaviour of borrowers in terms of spending on durable goods and repaying debt.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Credit and credit aggregates, Housing, Interest rates, Monetary policy, Monetary policy transmission JEL Code(s): D, D1, D12, D14, E, E4, E43, E5, E52, G, G2, G21, R, R3, R31

• The Power of Helicopter Money Revisited: A New Keynesian Perspective

  Staff Discussion Paper 2020-1 Thomas J. Carter, Rhys R. Mendes

  We analyze money financing of fiscal transfers (helicopter money) in two simple New Keynesian models: a “textbook” model in which all money is non-interest-bearing (e.g., all money is currency), and a more realistic model with interest-bearing reserves.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Credibility, Economic models, Fiscal policy, Inflation targets, Interest rates, Monetary policy, Monetary policy and uncertainty, Monetary policy framework, Monetary policy transmission JEL Code(s): E, E1, E12, E4, E41, E43, E5, E51, E52, E58, E6, E61, E63

• Managing GDP Tail Risk

  Staff Working Paper 2020-3 Thibaut Duprey, Alexander Ueberfeldt

  Models for macroeconomic forecasts do not usually take into account the risk of a crisis—that is, a sudden large decline in gross domestic product (GDP). However, policy-makers worry about such GDP tail risk because of its large social and economic costs.

  Content Type(s): Staff research, Staff working papers Topic(s): Central bank research, Economic models, Financial stability, Financial system regulation and policies, Interest rates, Monetary policy, Monetary policy framework JEL Code(s): D, D8, E, E4, E44, E5, E52, E58, G, G0, G01

• Social Learning and Monetary Policy at the Effective Lower Bound

  Staff Working Paper 2020-2 Jasmina Arifovic, Alex Grimaud, Isabelle Salle, Gauthier Vermandel

  This research develops a model in which the economy is directly influenced by how pessimistic or optimistic economic agents are about the future. The agents may hold different views and update them as new economic data become available.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Central bank research, Credibility, Economic models, Monetary policy, Monetary policy communications JEL Code(s): C, C8, C82, E, E3, E32, E5, E52

• Monetary Policy and Government Debt Dynamics Without Commitment

  Staff Working Paper 2019-52 Dmitry Matveev

  I show that maturity considerations affect the optimal conduct of monetary and fiscal policy during a period of government debt reduction. I consider a New Keynesian model and study a dynamic game of monetary and fiscal policy authorities without commitment, characterizing the incentives that drive the choice of interest rate.

  Content Type(s): Staff research, Staff working papers Topic(s): Fiscal policy, Monetary policy JEL Code(s): E, E5, E52, E6, E62, E63

• Furor over the Fed : Presidential Tweets and Central Bank Independence

  Staff Analytical Note 2019-33 Antoine Camous, Dmitry Matveev

  We illustrate how market data can be informative about the interactions between monetary and fiscal policy. Federal funds futures are private contracts that reflect investor’s expectations about monetary policy decisions.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Central bank research, Credibility, Financial markets, Monetary policy JEL Code(s): E, E4, E44, E5, E52, E58

• Cashless Bank Branches in Canada

  Staff Analytical Note 2019-29 Walter Engert, Ben Fung

  Cashless or tellerless bank branches have proliferated in several countries in recent years. In a cashless bank branch, teller or counter services such as cash withdrawals, deposits and cheque-cashing are not available.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Bank notes, Digital currencies and fintech, Financial services JEL Code(s): E, E4, E41, E42, E5, E51

• The Economics of Cryptocurrencies—Bitcoin and Beyond

  Staff Working Paper 2019-40 Jonathan Chiu, Thorsten Koeppl

  Since the creation of Bitcoin in 2009, over 2,000 cryptocurrencies have been issued. We evaluate how well a cryptocurrency functions as a payment system.

  Content Type(s): Staff research, Staff working papers Topic(s): Digital currencies and fintech, Monetary policy, Payment clearing and settlement systems JEL Code(s): E, E4, E5, L, L5