This paper was presented at the Federal Reserve Bank of Kansas City's Symposium on "Monetary Policy and Uncertainty: Adapting to a Changing Economy" at Jackson Hole, Wyoming on 28-30 August 2003. The views expressed are those of the authors and do not necessarily reflect those of the BIS.

We argue that in order to achieve price stability in a sustainable way, central banks should consider paying greater attention to credit in their monetary policy strategies than is generally the case at present. Specifically, simply setting monetary policy so that a two-year inflation forecast...

This paper compares the responses of short-term bank lending rates to policy rates in a sample of 12 industrialised countries and seeks to relate them to characteristics of the financial system and of the policy environment. The degree of competition in the loan market and the clarity of the...

Over the last decade or so, addressing financial instability has risen to the top of the policy agenda. This essay argues that in order to improve the safeguards against financial instability, it may be desirable to strengthen further the macroprudential orientation of current prudential...

The rhetoric of deflation has become more prevalent in policy circles and in the press despite the fact that deflation has been a rare phenomenon in modern fiat currency economies. To better understand the nature of deflation, this paper looks back to a period when deflation was a regular...

This paper reviews the challenges faced by central banks in recent years in order to evaluate their policy implications going forward. To highlight the genuine uncertainty surrounding the lessons to be drawn, the paper examines recent experience through two intentionally polarised perspectives,...

Since the 1980s, a number of episodes of financial market distress have underscored the importance of the smooth functioning of markets for the stability of the financial system. At the heart of these episodes was a sudden and drastic reduction in market liquidity, characterised by disorderly...

This paper explores primarily how financial arrangements may be responsible for creating or exacerbating inflationary pressures in Yugoslavia. The ways in which financial arrangements can contribute to inflation are discussed under three different headings: misallocation of savings and credit,...

This paper examines the sharp rise in bond yield volatility across the major bond markets in 1994. The analysis covers thirteen industrialised countries and is largely based on OTC data for implied bond yield volatility. We conclude that the market's own dynamics seem to provide a stronger...

This paper provides a unique comparative overview of the structure of credit to the non-government sector in 14 industrialised countries and of its evolution over time with a view to casting new light on the implications for the transmission mechanism of monetary policy. The analysis draws on...