The recent boom in housing markets of most developed economies has spurred criticism that inflation targeting central banks may have neglected the build-up of financial imbalances. This paper provides a formal empirical test of such claims, using a standard program evaluation methodology to...

Central banks are often reluctant to take immediate or forceful actions in the face of new information on the economic outlook. To rationalize this cautious approach, Brainard’s attenuation principle is often invoked: when a policy-maker is unsure of the effects of his policies, he should...

Central banks increasingly acknowledge that climate change is a source of financial risks, which is likely to also impact their conduct of monetary policy. Against this backdrop, the aim of this paper is to explore one potential approach to factoring climate-related transition risks into a...

In spite of a still very low volume at the global level, in comparison with the main reserve currencies, digital currencies attract a lot of attention. The paper reminds that it is above all the exchange mechanism incorporated in digital currencies (the distributed ledger technology) which...

We assess the effect of accepting illiquid assets as collateral at the central bank on banks' lending activity. We study the lending activity of the 177 largest banks in the Euro area between 2011m1 and 2014m12 and the composition of their pool of collateral pledged with the Eurosystem. Panel...

Two different approaches to central banking in the aftermath of the crisis are contrasted. In the first one, labelled ‘New Normal', the monetary policy strategy is broadened to encompass such objectives as financial stability or full employment. Furthermore, the inflation target is raised and...

In the age of high-frequency trading in financial markets and faster payment services in account-to-account (A2A) transactions of bank retail customers, it may seem odd that the shortest maturity that is traded in the money market is overnight. This situation reflects policies implemented by...

A number of central banks in advanced countries use ranges, or bands, around their inflationtarget to formulate their monetary policy strategy. The adoption of such ranges has beenproposed by some policymakers in the context of the Fed and the ECB reviews of theirstrategies. Using a standard New...

We address this question using an estimated New Keynesian DSGE model of the Euro Areawith trend inflation, imperfect indexation, and a lower bound on the nominal interest rate. Inthis setup, a decrease in the steady-state real interest rate, r*, increases the probability ofhitting the lower...

In June 2018, the People’s Bank of China (PBoC) decided to include green financial bonds into the pool of assets eligible as collateral for its Medium Term Lending Facility. The PBoC also gave green financial bonds a “first-among-equals” status. We measure the impact of the policy on the...