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Monetary policy at crisis times

Author

Listed:
  • Kemal Kozarić

    (Governor of the Central Bank of Bosnia and Herzegovina and a professor at the Faculty of Economics in Sarajevo)

  • Nikola Fabris

    (Chief Economist of the Central Bank of Montenegro and a professor at the Faculty of Economics in Belgrade)

Abstract

Working in a financial crisis environment is one of the most stressing tasks for a central banker. In order to diffuse a financial crisis, preventive policies, are of vital importance yet they cannot remove all disruptions that could lead to a crisis. Therefore, when a crisis emerges, risk management is of crucial importance. Risk management requires the utilisation of all available monetary policy instruments, as well as many unconventional instruments that would otherwise be considered as unacceptable in normal times. The paper discusses which actions a central bank should take at a down of a crisis, including the instruments from the “psychological arsenal” such as crisis PR and deposit insurance.

Suggested Citation

  • Kemal Kozarić & Nikola Fabris, 2012. "Monetary policy at crisis times," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 1(1), pages 5-24.
    • Handle: RePEc:cbk:journl:v:1:y:2012:i:1:p:5-24
    as

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    File URL: http://www.cbcg.me/repec/cbk/journl/vol1no1-1.pdf
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    References listed on IDEAS

    as
    1. Barth,James R. & Caprio,Gerard & Levine,Ross, 2008. "Rethinking Bank Regulation," Cambridge Books, Cambridge University Press, number 9780521709309, November.
    2. Bofinger, Peter, 2001. "Monetary Policy: Goals, Institutions, Strategies, and Instruments," OUP Catalogue, Oxford University Press, number 9780199248568, Decembrie.
    3. Bindseil, Ulrich, 2004. "Monetary Policy Implementation: Theory, past, and present," OUP Catalogue, Oxford University Press, number 9780199274543, Decembrie.
    4. Jonathan David Ostry & Atish R. Ghosh & Karl F Habermeier & Marcos d Chamon & Mahvash S Qureshi & Dennis B. S. Reinhardt, 2010. "Capital Inflows; The Role of Controls," IMF Staff Position Notes 2010/04, International Monetary Fund.
    5. Philip Arestis & Malcolm Sawyer, 2004. "Re-examining Monetary and Fiscal Policy for the 21st Century," Books, Edward Elgar Publishing, number 3240, December.
    6. Paul Mizen (ed.), 2003. "Central Banking, Monetary Theory and Practice," Books, Edward Elgar Publishing, number 2329, December.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Milutin Ješić, 2013. "Implications of Fiscal Irresponsibility on Financial Stability," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 2(3), pages 111-138.
    2. Željka Asanović, 2017. "Predicting Systemic Banking Crises Using Early Warning Models: The Case of Montenegro," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 6(3), pages 157-182.
    3. Marina Djenic & Snezana Popovcic-Avric & Lidija Barjaktarovic, 2012. "Importance of forward contracts in the financial crisis," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 1(2), pages 75-96.
    4. repec:cbk:journl:v:2:y:2013:i:2:p:111-138 is not listed on IDEAS

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    More about this item

    Keywords

    central bank; monetary policy; crisis; monetary policy instruments; crisis PR;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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