Monetary Policy Implementation: A European Perspective

36 Pages Posted: 12 Apr 2007

See all articles by Ulrich Bindseil

Ulrich Bindseil

European Central Bank (ECB)

Kjell G. Nyborg

University of Zurich - Department of Banking and Finance; Centre for Economic Policy Research (CEPR); Swiss Finance Institute

Date Written: March 27, 2007

Abstract

Monetary policy implementation is one of the most significant areas of interaction between central banking and financial markets. Historically, how this interaction takes place has been viewed as having an important impact on the ultimate objective of monetary policy, for example price stability or stimulating economic growth. In this article, we survey different approaches to monetary policy implementation. We cover briefly some of the historical trends, but give particular attention to the practice that is now (again) very common world-wide; namely, targeting short term interest rates. We discuss various ways this can be done and the implications for financial markets. We emphasize different European approaches, while also providing comparisons with the Fed.

Suggested Citation

Bindseil, Ulrich and Nyborg, Kjell G., Monetary Policy Implementation: A European Perspective (March 27, 2007). NHH Department of Finance & Management Science Discussion Paper No. 2007/10, Available at SSRN: https://ssrn.com/abstract=979906 or http://dx.doi.org/10.2139/ssrn.979906

Ulrich Bindseil

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Kjell G. Nyborg (Contact Author)

University of Zurich - Department of Banking and Finance ( email )

Plattenstrasse 14
Z├╝rich, 8032
Switzerland
+41 (0)44 634 2980 (Phone)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

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