Monday , November 11 2019
Home / Tag Archives: Central Banks / Monetary Policy

Tag Archives: Central Banks / Monetary Policy

The impact of negative interest rates on banks and firms

I had blogged about impact of negative interest rates on pension markets. Carlo Altavilla, Lorenzo Burlon, Mariassunta Giannetti and Sarah Holton write about impact of negative interest rates (NIRP) on banks and firms: Economists and policymakers continue to question the effectiveness of monetary policy when an economy faces near-zero or sub-zero interest rates. Sceptics argue that central banks cannot stimulate lending, and may indeed decrease the loan supply, by setting negative...

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The Road to Serfdom at 75: When central bankers reflect on lessons from Hayek

Yale Univ recently organised a conference on the 75 years of Hayek’s book : Road to serfdom. I had pointed to a fascinating paper on the Book’s 75 years earlier. One of the speakers in the Yale event was Randall Quarles, Vice chair of Federal Reserve. In his speech he reflects on lessons from Hayek: The financial crisis, and the deep recession that followed it, prompted changes in the United States’ regulatory framework. These changes have been designed to make the financial system more...

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Demonetisation in Kenya: A step in fight against corruption (corruption by whom?)

Tomorrow is 3 years of India’s demonetisation. Kenya also recently went thorough its own demonetisation but it was more gradual compared to that of India. India could deposit old notes in banks in 50 days where as in Kenya it was over 4 months (1 Jun 2019 to 30 Sep 2019). They also demonetised Kenyan Shilling 1000 notes just like INR 1000 (and Rs 500) in India. To compare, 1000 KeSh = INR 690. Unlike RBI which was totally silent on demonetisation, Kenyan central bank governor Patrick...

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How low/negative interest rates are impacting pension industry? The Swiss case

I had blogged about Denmark central banker being concerned about impact of low interest rates on pensions. Thomas Jordan, head of Swiss National Bank, in this speech speaks on issues facing pension funds industry. The situation even more acute in Swissland as it has negative interest rates: The first challenge that you as pension fund managers have faced for some considerable time now is the persistently low level of interest rates. These low rates are prevalent not only in Switzerland,...

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From Greenspan standard to Draghi standard

My new piece in moneycontrol (behind paywall), reflecting on tenure of Maro Draghi. I argue how we have moved from Greenspan standard to perhaps a Draghi standard. In the famous 2005 Jackson Hole conference, Alan Blinder and Ricardo Reis summarised the (Alan) Greenspan standard as 11 principles: Keep your options open Don’t let yourself get trapped in doctrinal straitackets Avoid policy reversals Forecasts and models though necessary are unreliable Act preemptively when you can Risk...

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Why Modern Money Theory needs to be taken seriously

Ajit Ranade had earlier written an article in Mint on MMT. Prof Sashi Sivramkrishna writtes a rebuttal piece arguing why we need to take MMT seriously: In just four minutes of reading time, Ajit Ranade’s opinion piece, The Inexplicable Allure Of Modern Monetary Theory, published in Mint on 21 October, attempts to bring down Modern Money Theory (MMT), a school of thought that presents a cogent alternative to the mainstream neoliberal macroeconomic discourse by fundamentally reassessing...

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RBI’s Sandbox: First theme is digital payments

RBI had announced starting its own sandbox on the lines of other central banks. The idea is to bring technology, banking and regulation in a lab setting for experimentation. The first theme under the sandbox is digital payments: The Reserve Bank announces the opening of first cohort under the Regulatory Sandbox (RS) with ‘Retail Payments’, as its theme. The adoption of ‘Retail Payments’ as the theme is expected to spur innovation in digital payments space and help in offering payment...

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Japan enters rehab for cash addiction

Mr Burkhard Balz of the Deutsche Bundesbank in a recent speech compared why Germany and Japan both love cash: I have to admit that, compared with the metropolis of Tokyo, my place of work – Frankfurt – feels like a village, to say nothing of my hometown of Stadthagen west of Hanover in charming Lower Saxony. Tokyo and Frankfurt, or rather Japan and Germany, are some 10,000 km – a 12-hour flight – apart, and they each have their own distinct culture with many special features. At the...

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Fewer women staff? Central banks are serious about it

My new piece in moneycontrol. I reflect on the lessons from the recent ECB conference on Gender and career progression. The conference will feature research on issues that women face in career advancement and on initiatives to address the gender gap. The conference is the second in a series organised jointly by the European Central Bank, the Bank of England and the Federal Reserve Board. Advertisements...

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Making the best out of second-best climate policies

Economists like Prof Avinash Dixit and Dani Rodrik often say second best is the best. We always hope for the best economic outcomes which is not really possible. By focusing on the best of the second best, is as good. Olli Rehn Governor of the Bank of Finland says the same in this speech: While street demonstrations and citizen activism play an important role in pressing for more ambitious climate action, what we need in terms of public policy is consistent, systemic and rational policy...

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