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Europe > Switzerland

You are looking at 1 - 8 of 8 items for :

  • Type: Journal Issue x
  • Central Banks and Their Policies x
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Cover IMF Working Papers
Dirty Money: Does the Risk of Infectious Disease Lower Demand for Cash?
Mr. Serhan Cevik
The coronavirus pandemic is a global crisis like no other in modern times, and there is a growing apprehension about handling potentially contaminated cash. This paper is the first empirical attempt in the literature to investigate whether the risk of infectious diseases affects demand for physical cash. Since the intensity of cash use may influence the spread of infectious diseases, this paper utilizes two-stage least squares (2SLS) methodology with instrumental variable (IV) to address omitted variable bias and account for potential endogeneity. The analysis indicates that the spread of infectious diseases lowers demand for physical cash, after controlling for macroeconomic, financial, and technological factors. While the transactional constraints imposed by the COVID-19 pandemic could become a catalyst for the use of digital technologies around the world, electronic payment methods may not be universally available in every country owing to financial and technological bottlenecks.
Keywords:
Demand for cash; currency-in-circulation; digital money; infectious diseases; WP; cash use; handling cash; cash transfer; store of value; infectious-disease outbreak; payment method; coronavirus pandemic; Communicable diseases; Currencies; COVID-19; Deposit rates; Ebola; Global
Cover IMF Working Papers
Quantitative Easing and Long-Term Yields in Small Open Economies
Antonio Diez de los Rios
and
Maral Shamloo
We compare the effectiveness of Federal Reserve's asset purchase programs in lowering longterm yields with that of similar programs implemented by the Bank of England, the Swedish Riksbank, and the Swiss National Bank's reserve expansion program. We decompose government bond yields into (i) an expectations component, (ii) a global, and (iii) a country specific term premium to analyze two-day changes in 10-year yields around announcement dates. We find that, in contrast to the Federal Reserve's asset purchases, the programs implemented in these smaller economies have not been able to affect the global term premium and, furthermore, they have had limited, but significant, effect in lowering long-term yields.
Keywords:
WP; yield; asset purchase; expected return; Unconventional monetary policy; event study; signaling; portfolio balance; asset purchases; purchase announcement; long-term yield; purchase program; QE asset purchase; QE program; Riksbank asset purchase announcement; asset purchase announcement; BoE Monetary Policy Commitee; fed funds rate; zero-coupon bond; Yield curve; Unconventional monetary policies; Bonds; Sovereign bonds; Long term interest rates; Global
Cover IMF Working Papers
FX Intervention in the New Keynesian Model
Zineddine Alla
,
Mr. Raphael A Espinoza
, and
Mr. Atish R. Ghosh
We develop an open economy New Keynesian Model with foreign exchange intervention in the presence of a financial accelerator mechanism. We obtain closed-form solutions for the optimal interest rate policy and FX intervention under discretionary policy, in the face of shocks to risk appetite in international capital markets. The solution shows that FX intervention can help reduce the volatility of the economy and mitigate the welfare losses associated with such shocks. We also show that, when the financial accelerator is strong, the risk of multiple equilibria (self-fulfilling currency and inflation movements) is high. We determine the conditions under which indeterminacy can occur and highlight how the use of FX intervention reinforces the central bank’s credibility and limits the risk of multiple equilibria.
Keywords:
WP; risk premium; central bank; Central bank reserves; Speculative attack; Portfolio balance model; Equilibrium determinacy; Capital flows; Capital controls; Open Economy New Keynesian Model.; FX intervention; risk premium shock; open economy; terms of trade; sterilized foreign exchange intervention; working capital; Consumption; Return on investment; Exchange rates; Inflation; Global
Cover IMF Working Papers
Negative Interest Rate Policy (NIRP): Implications for Monetary Transmission and Bank Profitability in the Euro Area
Andreas Jobst
and
Ms. Huidan Huidan Lin
More than two years ago the European Central Bank (ECB) adopted a negative interest rate policy (NIRP) to achieve its price stability objective. Negative interest rates have so far supported easier financial conditions and contributed to a modest expansion in credit, demonstrating that the zero lower bound is less binding than previously thought. However, interest rate cuts also weigh on bank profitability. Substantial rate cuts may at some point outweigh the benefits from higher asset values and stronger aggregate demand. Further monetary accommodation may need to rely more on credit easing and an expansion of the ECB’s balance sheet rather than substantial additional reductions in the policy rate.
Keywords:
WP; rate; deposit; Policy rate; bank; deposit rate; negative rates; NIRP; unconventional monetary policy; monetary transmission; money market rate; negative rate; bank lending survey; sight deposit rate; rate cut; solvency constraint; rate setting; tiered deposit rate; marginal policy rate; central bank deposit rate; interest margin; Deposit rates; Central bank policy rate; Bank soundness; Negative interest rates; Money markets; rateminus deposit rate
Cover IMF Working Papers
An Overview of Macroprudential Policy Tools
Mr. Stijn Claessens
Macroprudential policies – caps on loan to value ratios, limits on credit growth and other balance sheets restrictions, (countercyclical) capital and reserve requirements and surcharges, and Pigouvian levies – have become part of the policy paradigm in emerging markets and advanced countries alike. But knowledge is still limited on these tools. Macroprudential policies ought to be motivated by market failures and externalities, but these can be hard to identify. They can also interact with various other policies, such as monetary and microprudential, raising coordination issues. Some countries, especially emerging markets, have used these tools and analyses suggest that some can reduce procyclicality and crisis risks. Yet, much remains to be studied, including tools’ costs ? by adversely affecting resource allocations; how to best adapt tools to country circumstances; and preferred institutional designs, including how to address political economy risks. As such, policy makers should move carefully in adopting tools.
Keywords:
WP; externality; monetary policy; bank; credit crunch; Financial stability; financial intermediation; externalities; market failures; procyclicality; systemic risks; capital requirement; resource allocation; interconnectedness externality; market failures policy; bank leverage; house price inflation; assets bank; foreign currency; Macroprudential policy; Systemic risk; Financial sector stability; Credit; Global
Cover IMF Policy Discussion Papers
The Payment System and Monetary Policy
Mr. Omotunde E. G. Johnson
Achieving the primary objective of price stability without unduly compromising the operational efficiency of the payment system constitutes a major problem for central banks. Routine monetary policy presumes a given institutional and technological framework, including aspects of the payment system. Such a monetary policy concerns itself with intraday and interday credit for payments settlements and with float. Liquidity shocks and panics sometimes pose an additional challenge. In recent years, major and rapid institutional and technological changes in the payment system (mainly to lower risks and augment operational efficiency) have affected the monetary policy decision-making process, particularly in the short run.
Keywords:
PDP; central bank; payment system; monetary policy; payment; market; credit facilities; market operation; A. central bank credit Policy; money multiplier; payment settlement; settlement purpose; central bank credit policy; routine monetary policy; monetary policy point of view; monetary policy transmission mechanism; payments organization; payment system reform; Payment systems; Credit; Central bank credit; Monetary operations; Large value payment systems; Global
Cover IMF Working Papers
The Design and Printing of Bank Notes: Considerations When Introducing a New Currency
Mr. Richard K. Abrams
Many newly independent or systemically transforming countries feel a pressing need to--or must--introduce their own national currency. Other countries simply wish to enhance the attractiveness, usefulness, durability, and/or security of their currencies. However, it is difficult to find consistent published information on the various aspects of this process. This paper attempts to ameliorate this problem by discussing the main issues in designing, producing, and printing a new currency, in order to help those charged with these tasks to proceed in an orderly and informed manner. Attention is also given to examining the options that may be available when this exercise must be undertaken on an emergency basis, with little or no warning.
Keywords:
WP; bank notes; bank note printing industry; bank note printing operation; bank note issue; bank note producer; printing work; Bank of Canada note circulation; Currencies; Securities; Inflation; Public expenditure review
Cover IMF Working Papers
The Use of Foreign Exchange Swaps by Central Banks: A Survey
Ms. Catharina J. Hooyman
The paper discussed the use of foreign exchange swaps by central banks. Such use has aimed at affecting domestic liquidity, managing foreign exchange reserves, and stimulating domestic financial markets. It discusses these different uses and present evidence for a selected group of countries. The paper cautions about the use of foreign exchange swaps to defend a particular exchange rate at a time when foreign exchange reserves are under pressure. It notes, finally, that use of foreign exchange swaps by central banks has been losing importance.
Keywords:
WP; swap; currency; dollar; market; U.S. dollar; swap operation; swap transaction; forward market; Turkish lira; Fed issues dollar; profit and loss account; swap facility; Kuwaiti dinar; central bank loss; U.S. dollar swap facility; central bank need; Currency swaps; Currency markets; Currencies; Exchange rates; Africa; Global