rule cannot be implemented when the central bank uses standing facilities, while it can be implemented with open market …

While the goals that guide monetary policy in different countries are very similar, central banks diverge in their … methods of implementing policy. This study of the policy frameworks of four central banks—the Federal Reserve, the European … Central Bank, the Bank of England, and the Swiss National Bank—focuses on two notable areas of difference. The first is the …

. Freeman's conclusion that the central bank should absorb losses related to default to provide risk-sharing goes against the … concern that central banks should limit their exposure to credit risk. We extend Freeman's model by introducing moral hazard …. With moral hazard, the central bank should avoid absorbing losses, contrary to Freeman's argument. However, we show that …

and the optimal policy of a central bank in response to both idiosyncratic and aggregate shocks. In particular, we … the market ex post. We show that a central bank should use different tools to manage different types of shocks …

maximize aggregate ex ante social welfare. Indeed one or, more surprisingly, both types of agents may benefit if the central …

. They trade off the cost of delaying a payment against the cost of borrowing liquidity from the central bank. The …

some prespecified event occurs. LSMs can reduce the amount of central bank balances necessary to operate a payments system …

Many central banks implement monetary policy in a way that maintains a tight link between the stock of money and the … tensions. The authors explain how this approach, in which the central bank pays interest on reserves at the target interest …