Should Unconventional Balance Sheet Policies Be Added to the Central Bank toolkit? a Review of the Experience so Far

Abstract

What is the case for adding the unconventional balance sheet policies used by major central banks since 2007 to the standard policy toolkit? The record so far suggests that the new liquidity providing policies in support of financial stability generally warrant inclusion. As the balance sheet policies aimed at macroeconomic stability were used only by a small number of highly credible central banks facing a lower bound constraint on conventional interest rate policy, they are not relevant for most central banks or states of the world. Best practices of these policies are documented in this paper.

Implications of Central Bank Digital Currencies for Monetary Policy Transmission

“…Losses could undermine the central bank's independence (Ishi, Fujita, and Stone 2011). If a CBDC is nonremunerated, seigniorage could be expected to grow.…”

The Impact of Unconventional Monetary Policies on the Stocks of Bank Deposits: Evidence at an Aggregate Level in the Euro Area

“…The seriousness and persistence of the global financial crisis started in 2007 have required Unconventional Monetary Policies (UMPs) taken by central banks around the world, in order to contain risks of low inflation or deflation and to counteract the slowdown in economic activity. The UMPs refer, in general terms, to all the new or innovative instruments of monetary policy, such as negative interest rates, longer-term refinancing operations, large-scale purchases of financial assets and forward guidance (for a taxonomy see, for instance: BIS, 2019; Borio and Zabai, 2016;Stone et al, 2011). Despite a common international financial crisis, the various central banks have adopted different UMPs strategies based on their respective mandates and considering the role of credit institutions in financing the economy.…”