Globalization and Monetary Policy Tools at the Zero Lower Bound



Year of publication 2016
Type Article in Proceedings
Conference Proceedings of the 16th International Scientific Conference Globalization and Its Socio-Economic Consequences
MU Faculty or unit

Faculty of Economics and Administration

Web Žilinská Univerzita v Žilině
Field Economy
Keywords deflation; exchange rate; foreign exchange interventions; monetary policy; zero lower bound
Description The dramatic events of the global financial crisis acted as a coordination device for expansionary policy interventions in all advanced economies. A significant number of central banks have lowered their rates in response to the global financial crisis in order to mitigate its consequences and meet their monetary policy goals and have announced that they expect rates to be at low levels for a significant period of time. Depending on the particular situation of their economy and financial sector, central banks around the world have turned their attention to various unconventional monetary policy measures, such as negative interest rates on deposits, various forms of quantitative or qualitative easing, and foreign exchange interventions. The article explains the reasons for further easing monetary policy and for choosing suitable monetary policy tools. It analyses the causes leading up to the foreign exchange intervention by the Czech National Bank in November 2013 and its consequences. The article examines the use of exchange rate by the Czech National Bank as a monetary policy instrument at the zero lower bound on interest rates and discusses its expected benefits in the case of the Czech Republic.
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