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Dual Interest Rates
Dual interest rates refers to a policy implemented by central banks which aims to influence lending rates independently of deposit rates as a means of stimulating economic activity. Policies similar to this have long been a feature of Chinese monetary policy. More recently dual interest rates have been introduced by the European Central Bank (ECB), under its TLTRO II scheme as an unconventional monetary policy. More aggressive use of these policies has been suggested as an effective alternative to negative interest rates, quantitative easing (QE) and forward guidance. Historical context Central banks have always operated with a number of different interest rates. Historically, the Federal reserve has relied on two interest rates, the discount rate, and the federal funds rate. The federal funds rate is the primary policy rate, which is aimed at determining money market rates, at which banks lend to each other. In conventional central banking, the discount rate is set above the poli ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Unconventional Monetary Policy
Monetary policy is the policy adopted by the monetary authority of a nation to control either the interest rate payable for very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money supply, often as an attempt to reduce inflation or the interest rate, to ensure price stability and general trust of the value and stability of the nation's currency. Monetary policy is a modification of the supply of money, i.e. "printing" more money, or decreasing the money supply by changing interest rates or removing excess reserves. This is in contrast to fiscal policy, which relies on taxation, government spending, and government borrowing as methods for a government to manage business cycle phenomena such as recessions. Further purposes of a monetary policy are usually to contribute to the stability of gross domestic product, to achieve and maintain low unemployment, and to maintain predictable exchange rates with other currencies. Monetary ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Quantitative Easing
Quantitative easing (QE) is a monetary policy action whereby a central bank purchases predetermined amounts of government bonds or other financial assets in order to stimulate economic activity. Quantitative easing is a novel form of monetary policy that came into wide application after the financial crisis of 2007-2008. It is intended to stabilize an economic contraction when inflation is very low or negative and when standard monetary policy instruments have become ineffective. Quantitative tightening (QT) does the opposite, where for monetary policy reasons, a central bank sells off some portion of its own held or previously purchased government bonds or other financial assets, to a mix of commercial banks and other financial institutions, usually after periods of their own, earlier, quantitative easing purchases. Similar to conventional open-market operations used to implement monetary policy, a central bank implements quantitative easing by buying financial assets from comme ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Forward Guidance
Forward guidance is a tool used by a central bank to exercise its power in monetary policy in order to influence, with their own forecasts, market expectations of future levels of interest rates. Communication about the likely future course of monetary policy is known as "forward guidance". Individuals and businesses will use this information in making decisions about spending and investments. Thus, forward guidance about future policy can influence financial and economic conditions today. The strategy can be implemented in an explicit way, expressed through communication of forecasts and future intentions, sometimes known as Odyssean forward guidance. Implied forward guidance also exists, sometimes referred to as Delphic forward guidance. It is a softer and less-binding version of forward guidance to achieve similar effects. Among the main central banks, Delphic forward guidance dominates, although there are a couple of exceptions such as the US Federal Reserve, which makes quite ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Federal Reserve
The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of financial panics (particularly the panic of 1907) led to the desire for central control of the monetary system in order to alleviate financial crises. Over the years, events such as the Great Depression in the 1930s and the Great Recession during the 2000s have led to the expansion of the roles and responsibilities of the Federal Reserve System. Congress established three key objectives for monetary policy in the Federal Reserve Act: maximizing employment, stabilizing prices, and moderating long-term interest rates. The first two objectives are sometimes referred to as the Federal Reserve's dual mandate. Its duties have expanded over the years, and currently also include supervising and regulating banks, maintaining the stabili ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Discount Window
The discount window is an instrument of monetary policy (usually controlled by central banks) that allows eligible institutions to borrow money from the central bank, usually on a short-term basis, to meet temporary shortages of liquidity caused by internal or external disruptions. The term originated with the practice of sending a bank representative to a reserve bank teller window when a bank needed to borrow money. The interest rate charged on such loans by a central bank is called the discount rate, policy rate, base rate, or repo rate, and is separate and distinct from the prime rate. It is also not the same thing as the federal funds rate or its equivalents in other currencies, which determine the rate at which banks lend money to ''each other''. In recent years, the discount rate has been approximately a percentage point above the federal funds rate (see Lombard credit). Because of this, it is a relatively unimportant factor in the control of the money supply and is only t ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Federal Funds Rate
In the United States, the federal funds rate is the interest rate at which depository institutions (banks and credit unions) lend reserve balances to other depository institutions overnight on an uncollateralized basis. Reserve balances are amounts held at the Federal Reserve to maintain depository institutions' reserve requirements. Institutions with surplus balances in their accounts lend those balances to institutions in need of larger balances. The federal funds rate is an important benchmark in financial markets. The effective federal funds rate (EFFR) is calculated as the effective median interest rate of overnight federal funds transactions during the previous business day. It is published daily by the Federal Reserve Bank of New York. The federal funds target range is determined by a meeting of the members of the Federal Open Market Committee (FOMC) which normally occurs eight times a year about seven weeks apart. The committee may also hold additional meetings an ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Money Market
The money market is a component of the economy that provides short-term funds. The money market deals in short-term loans, generally for a period of a year or less. As short-term securities became a commodity, the money market became a component of the financial market for assets involved in short-term borrowing, lending, buying and selling with original maturities of one year or less. Trading in money markets is done over the counter and is wholesale. There are several money market instruments in most Western countries, including treasury bills, commercial paper, banker's acceptances, deposits, certificates of deposit, bills of exchange, repurchase agreements, federal funds, and short-lived mortgage- and asset-backed securities. The instruments bear differing maturities, currencies, credit risks, and structures. A market can be described as a money market if it is composed of highly liquid, short-term assets. Money market funds typically invest in government securities, ce ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Simon Wren-Lewis
Simon Wren-Lewis is a British economist. He is a professor of economic policy at the Blavatnik School of Government at Oxford University and a Fellow of Merton College. Education Wren-Lewis was educated at Latymer Upper School, Hammersmith; Clare College, Cambridge ( MA Economics); and Birkbeck College, London ( MSc Economics). Career Wren-Lewis worked for Her Majesty's Treasury as a budget-team member from 1974 to 1981. From 1976 to 1980, he worked for the National Income Forecasting Team as a senior economic assistant. From 1986 to 1990, he was a Senior Research Officer and Senior Research Fellow at the National Institute of Economic and Social Research. From 1990 to 1995, Wren-Lewis was chair in macroeconomic modelling at the University of Strathclyde. Wren-Lewis is currently an Oxford University professor of economics, teaching undergraduate and Masters of Philosophy (MPhil) students. He conducts research in economic methodology, macroeconomic theory and policy, and int ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Mario Draghi
Mario Draghi (; born 3 September 1947) is an Italian economist, academic, banker and civil servant who served as prime minister of Italy from February 2021 to October 2022. Prior to his appointment as prime minister, he served as President of the European Central Bank (ECB) between 2011 and 2019. Draghi was also Chair of the Financial Stability Board between 2009 and 2011, and Governor of the Bank of Italy between 2006 and 2011. After a lengthy career as an academic economist in Italy, Draghi worked for the World Bank in Washington, D.C., throughout the 1980s, and in 1991 returned to Rome to become Director General of the Italian Treasury. He left that role after a decade to join Goldman Sachs, where he remained until his appointment as Governor of the Bank of Italy in 2006. His tenure as Governor coincided with the 2008 Great Recession, and in the midst of this he was selected to become the first Chair of the Financial Stability Board, the global standard-setter that replaced ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
