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Symposium 2013

Solution for The Future of Central Banking and Financial Market Reform

The Challenge

The global financial crisis has revealed regulatory failure in financial markets and demonstrated the urgent need for reform. In particular, it is now widely accepted that in addition to established m ...

The global financial crisis has revealed regulatory failure in financial markets and demonstrated the urgent need for reform. In particular, it is now widely accepted that in addition to established microprudential policies, macroprudential policies aimed at increasing the stability of the financial sector as a whole are imperative. But an active debate has emerged over what role the central bank should play with this augmented set of policies.

Unconventional policy measures such as quantitative easing should be communicated as temporary measures rather than a paradigm shift

Great uncertainty has emerged about whether there has been a paradigm shift in the sense that in the future monetary policy will be practiced in a way completely different from the past. But unconventional monetary policy is appropriate only during severe financial crises or when the interest rate is at the zero lower bound. Extending unconventional measures for a prolonged period of time will almost certainly lead to new bubbles and distortions in other parts of the economy. Thus, central banks should communicate clear exit strategies that will mitigate concerns about rising inflation and new bubbles.

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    Macroprudential regulation should be located at central banks

    Macroprudential regulation should be located at central banks

    Macroprudential regulation should be located at central banks

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    Central banks should increase the transparency of their decision-making to deal with increased uncertainty and maintain their credibility

    Central banks should increase the transparency of their decision-making to deal with increased uncertainty and maintain their credibility

    Central banks should increase the transparency of their decision-making to deal with increased uncertainty and maintain their credibility

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    Symposium 2013

    Acknowledge the limitations of monetary policy

    Acknowledge the limitations of monetary policy

    Acknowledge the limitations of monetary policy

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