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Central Banks And Financial Markets. Adjustments To A New Reality

Author

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  • LUPU, Iulia

    (“Victor Slăvescu” Centre for Financial and Monetary Research, Romanian Academy, Bucharest, Romania)

Abstract

Following the recent financial turmoil, the theories and paradigms based on the efficiency and capacity of self-regulation of markets, have been much discussed. In the new created context, economies depend on central banks that by their power to print money provide a quick response to crises. Increasing dominance of the monetary policy and the transformation of more and more central banks into institutions with very wide scope open new debates on the authority, prudence and independence of central banks. Monetary policy has supported the financial markets for the past 8-9 years, but the direction has gradually begun to change. However, there are different trends and actions at the level of the globally representative central banks. Financial markets have become more and more dependent on central bank support, and their room for manoeuvre has diminished. Continuing this situation as public confidence in central banks is called into question may have serious consequences for the financial markets and the economy in general.

Suggested Citation

  • LUPU, Iulia, 2017. "Central Banks And Financial Markets. Adjustments To A New Reality," Journal of Financial and Monetary Economics, Centre of Financial and Monetary Research "Victor Slavescu", vol. 4(1), pages 211-216.
    • Handle: RePEc:vls:rojfme:v:4:y:2017:i:1:p:211-216
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    References listed on IDEAS

    as
    1. Kremer, Manfred & Lo Duca, Marco & Holló, Dániel, 2012. "CISS - a composite indicator of systemic stress in the financial system," Working Paper Series 1426, European Central Bank.
    2. repec:ecb:ecbwps:20111426 is not listed on IDEAS
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    More about this item

    Keywords

    central banks; financial markets; monetary policy;
    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
    • G19 - Financial Economics - - General Financial Markets - - - Other

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