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Adapting macro-prudential instruments to achieve monetary policy objectives

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  • Victoria Cociug

    (National Institute of Economic Research, Moldova)

Abstract

Monetary policy is used by governments to adjust financial market conditions to the needs of economic growth. But its application has certain limits, the biggest one being the interest rate limit on monetary policy instruments, which cannot be lesser than zero (although, at least in the euro area, this is already the case). Can monetary authorities use other instruments under these conditions? Currently, in the context of the COVID-19 crisis, most countries have injected huge sums of money into the financial market to maintain the consumption capacity of the population. Can macro-prudential policy instruments manage the existence of money supply to prevent it from entering the financial speculation market and inflate speculative bubbles / this article aims to analyze the behavior of macro-prudential policy, which can be used to achieve monetary policy objectives. The research is theoretical and contains reflections on the need for efficient use of macro-prudential policy instruments in optimizing monetary policy.

Suggested Citation

  • Victoria Cociug, "undated". "Adapting macro-prudential instruments to achieve monetary policy objectives," Review of Socio - Economic Perspectives 202181, Reviewsep.
    • Handle: RePEc:aly:journl:202181
    DOI: https://doi.org/10.19275/RSEP107
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    References listed on IDEAS

    as
    1. Matheron, J. & Antipa, P., 2014. "Interactions between monetary and macroprudential policies," Financial Stability Review, Banque de France, issue 18, pages 225-240, April.
    2. Repullo, Rafael & Suarez, Javier, 2008. "The Procyclical Effects of Basel II," CEPR Discussion Papers 6862, C.E.P.R. Discussion Papers.
    3. J. Boeckx & P. Ilbas & M. Kasongo Kashama & M. de Sola Perea & Ch. Van Nieuwenhuyze, 2015. "Interactions between monetary and macroprudential policy," Economic Review, National Bank of Belgium, issue ii, pages 7-29, september.
    4. Ben S. Bernanke & Mark Gertler, 1995. "Inside the Black Box: The Credit Channel of Monetary Policy Transmission," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 27-48, Fall.
    5. Ádám Balog & Orsolya Csortos & Ágnes Torös & Márton Zsigó, 2015. "Interaction between monetary and macroprudential policies in practice - a Hungarian example," BIS Papers chapters, in: Bank for International Settlements (ed.), What do new forms of finance mean for EM central banks?, volume 83, pages 159-180, Bank for International Settlements.
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    More about this item

    Keywords

    Monetary policy; macro-prudential policy; central bank; price stability;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • 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
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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