Unconventional Monetary Policies: An Appraisal
Claudio E. V. Borio
Bank for International Settlements (BIS) - Research and Policy Analysis
affiliation not provided to SSRN
November 1, 2009
BIS Working Paper No. 292
The recent global financial crisis has led central banks to rely heavily on "unconventional" monetary policies. This alternative approach to policy has generated much discussion and a heated and at times confusing debate. The debate has been complicated by the use of different definitions and conflicting views of the mechanisms at work. This paper sets out a framework for classifying and thinking about such policies, highlighting how they can be viewed within the overall context of monetary policy implementation. The framework clarifies the differences among the various forms of unconventional monetary policy, provides a systematic characterisation of the wide range of central bank responses to the crisis, helps to underscore the channels of transmission, and identifies some of the main policy challenges. In the process, the paper also addresses a number of contentious analytical issues, notably the role of bank reserves and their inflationary consequences.
Number of Pages in PDF File: 37
Keywords: unconventional monetary policy, balance sheet policy, credit policy, quantitative easing, credit easing, monetary policy implementation, transmission mechanism, interest rates
JEL Classification: E40, E50, E52, E58, E60
Date posted: November 23, 2009
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