Central Banks Are Already Doing the Unthinkable - You Just Don’t Know It
International Monetary Fund staff have called the past eight years an “era of extraordinary monetary policy,” with central banks applying more than 600 interest-rate cuts since 2008. “But the new wave of policy accommodation has ushered in fresh panic that monetary policy is suddenly subject to dwindling returns,” explains Mehreen Khan for the Telegraph. The focus on debt and limited spending rather than state investment could derail the global economy, the IMF warns, and she explains how central banks consider bypassing political leaders with so-called helicopter money – a “process by which central banks can create money to transfer to the public or private sector to stimulate economic activity and spending.” The process may be underway, and some economists suggest that the Bank of Japan’s three-tiered deposit rate represents a transfer of funds to commercial lenders. In Europe. Khan points out that Europe is challenged by an “incomplete monetary union.” Meanwhile consumers continue to save, pay off debt and resist the lure of low-cost loans that triggered the great recession that started in 2007. – YaleGlobal
Central Banks Are Already Doing the Unthinkable - You Just Don't Know It
Central bankers argue that monetary policy never runs out of ammunition and consider new stimulus tools to influence private-sector lending and spending
Monday, March 21, 2016
Mehreen Khan is a business reporter. She writes on economics, the eurozone and global finance.
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