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Hesitant Attempts Towards Normalizing Monetary Policies

Author

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  • IONESCU, Lucian C.

    (Institute for Studies on Finance&Banking, Bucharest, Romania)

Abstract

The 2007- 09 crisis was initially called the Great Recession and afterwards the Great Financial Crisis, thus being implicitly acknowledged the determinant role of nominal/monetary economy in igniting the crisis of the real economy. So there has been no ‗accident‘ that the so-called unconventional monetary policies (UMP) were the main tools used to stimulate financial and – hopefully – economic recovery. They have basically consisted in extremely low policy interest rates (zero or even negative) and an unprecedented enlargement of central banks‘ balance sheets. In principle, UMP were considered a temporary measure, useful for a couple of years. The prolonged stagnant recovery that followed the crisis has kept UMP in place for almost a decade (at least until 2017). This obvious abnormality for a ‗free market‘ capitalist economy should have stopped long ago. Our study tries to analyze the peculiarities of this situation and the pros & cons for ‗normalizing‘ monetary policies.

Suggested Citation

  • IONESCU, Lucian C., 2017. "Hesitant Attempts Towards Normalizing Monetary Policies," Journal of Financial and Monetary Economics, Centre of Financial and Monetary Research "Victor Slavescu", vol. 4(1), pages 149-153.
    • Handle: RePEc:vls:rojfme:v:4:y:2017:i:1:p:149-153
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    More about this item

    Keywords

    unconventional monetary policies (UMP); quantitative (and qualitative) easing; nominal and real interest rates; central banks‘ balance sheets and unwinding balance sheets;
    All these keywords.

    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G01 - Financial Economics - - General - - - Financial Crises

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