Normalization of modern monetary policy

Auteurs

• Aleksandra Nocoń

Paramètres

• Affaires et économie

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Nearly a decade has passed since central banks adopted unconventional measures in response to the global financial crisis, marking the beginning of a new era in central banking characterized by non-standard monetary policies. These measures, including low interest rates, unconventional liquidity support, and Quantitative Easing, have resulted in historically low interest rates, significant expansions of central banks’ balance sheets, and shifts in communication with stakeholders. The book explores the challenges of exiting these non-standard policies and preparing for an effective normalization process in modern monetary policy. Normalization involves implementing exit strategies outlined by central banks, aiming to transition from non-standard policies back to a framework reminiscent of the pre-crisis period. This process also entails withdrawing unconventional instruments and stabilizing banking sector conditions. The author emphasizes the importance of timing, pace, and sequencing in the normalization process. Additionally, the concept of a “new normal” is examined, questioning whether the post-crisis monetary landscape will resemble the old framework or represent a fundamentally different approach to monetary policy. This inquiry serves as a foundation for further exploration within the publication.

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• Année de publication: 2018