The Bank’s Money Market Framework

10 Pages Posted: 26 Dec 2010

See all articles by Roger Clews

Roger Clews

Bank of England

Chris Salmon

Bank of England

Olaf Weeken

Bank of England - Monetary Analysis

Date Written: December 13, 2010

Abstract

The Bank of England implements the policy stance of the Monetary Policy Committee through its operations in the sterling money markets. It also uses these operations to reduce the costs of disruption to the liquidity and payment services supplied by banks. In order to ensure their continued effectiveness, it was necessary to adapt the framework for these operations in response to the significant changes to financial and monetary conditions that occurred during the recent financial crisis. This article describes how central banks can use their money market operations to implement monetary policy and provide liquidity support to banks and some of the issues that can arise when undertaking operations to achieve these two objectives. The article goes on to explain the Bank’s choices about its own operating framework, including how its thinking has been influenced by the lessons learned during the financial crisis.

Suggested Citation

Clews, Roger and Salmon, Chris and Weeken, Olaf, The Bank’s Money Market Framework (December 13, 2010). Bank of England Quarterly Bulletin 2010 Q4. Available at SSRN: https://ssrn.com/abstract=1730151

Roger Clews

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

Chris Salmon

Bank of England

Threadneedle Street
London, EC2R 8AH
United Kingdom

Olaf Weeken (Contact Author)

Bank of England - Monetary Analysis ( email )

Threadneedle Street
London EC2R 8AH
United Kingdom

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