Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Two Major Economic Crises in the Early Twenty-First Century and their Impact on Central Bank Independence

Two Major Economic Crises in the Early Twenty-First Century and their Impact on Central Bank... AbstractTwo major economic crises in the early twenty-first century have had a serious impact on monetary policy and CB independence. Disruption in financial intermediation and associated deflationary pressures caused by the global financial crisis of 2007–2009 and European financial crisis of 2010–2015 pushed central banks (CBs) in major currency areas towards adoption of unconventional monetary policy measures, including large-scale purchase of government bonds (quantitative easing). The same approach has been taken by CBs in response to the COVID-19 crisis in 2020 even if the characteristics of this crisis differ from the previous one. As a result of both crises, CBs have become major holders of government bonds and de facto – main creditors of governments. Against rapidly deteriorating fiscal balances, CBs have become hostages of fiscal policies, which compromises their independence. Risks to the CB independence also come from their additional mandates (beyond price stability) and populist political pressures. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Accounting, Economics and Law de Gruyter

Two Major Economic Crises in the Early Twenty-First Century and their Impact on Central Bank Independence

Dabrowski, Marek
Accounting, Economics and Law , Volume 13 (2): 47 – May 1, 2023
Download PDF
47 pages

Loading next page...
 
/lp/de-gruyter/two-major-economic-crises-in-the-early-twenty-first-century-and-their-Q0wvG0S2ay

References

References for this paper are not available at this time. We will be adding them shortly, thank you for your patience.

Publisher
de Gruyter
Copyright
© 2023 CONVIVIUM, association loi de 1901
ISSN
2151-2820
eISSN
2152-2820
DOI
10.1515/ael-2020-0139
Publisher site
See Article on Publisher Site

Abstract

AbstractTwo major economic crises in the early twenty-first century have had a serious impact on monetary policy and CB independence. Disruption in financial intermediation and associated deflationary pressures caused by the global financial crisis of 2007–2009 and European financial crisis of 2010–2015 pushed central banks (CBs) in major currency areas towards adoption of unconventional monetary policy measures, including large-scale purchase of government bonds (quantitative easing). The same approach has been taken by CBs in response to the COVID-19 crisis in 2020 even if the characteristics of this crisis differ from the previous one. As a result of both crises, CBs have become major holders of government bonds and de facto – main creditors of governments. Against rapidly deteriorating fiscal balances, CBs have become hostages of fiscal policies, which compromises their independence. Risks to the CB independence also come from their additional mandates (beyond price stability) and populist political pressures.

Journal

Accounting, Economics and Law – de Gruyter

Published: May 1, 2023

Keywords: central bank independence; unconventional monetary policy; asset purchasing program; quantitative easing; deflationary pressure; inflation; demand for money; money multiplier; E31; E41; E51; E52; E58; H63

There are no references for this article.