We examine the economic consequences of an interest-bearing design of the Central-Bank Digital Currency (CBDC), and extend the discussion to an open-economy context with trade and capital flows. We use a dynamic stochastic general equilibrium (DSGE) model to simulate a baseline scenario with...

The paper investigates from the policy rate to the market rates under the interest rate marketization of the People's Bank of China (PBC) since 2014. The focus is on the pass-through of the PBC's policy target rates pass-through to the market rates. Empirical results, on the daily basis of an...

The dynamic effects of ECB announcements, disentangled into pure monetary policy and central bank information shocks, on the euro (EUR) exchange rate are examined using a Bayesian Proxy Vector Autoregressive (VAR) model fed with high-frequency data. Contractionary monetary policy shocks result...

Neoclassical economic theory views current account imbalances as the result of (individual) decisions to save more than to invest domestically, in line with the loan-able funds doctrine. Monetary analysis in the Keynesian tradition rejects such approaches and emphasizes that a country's net...

The paper analyses the monetary policy operations of central banks in the Middle East and North Africa (MENA). We distinguish the pattern of monetary policy operations of the liquidity providing central banks of the large industrialized countries (creditor central banks) and the liquidity...

Monetary authorities during a hyperinflation occasionally extract seignorage and then abandon the currency. Modelling the central bank as an exhaustible resource extracting monopolist that equates average and marginal profit to extract remaining seignorage by the optimal stopping time explains...

Recent research recognize that two balance sheet constraints can be of particular concern for an independent central bank: central bank equity cannot turn negative without any political and credibility risk, and central banks should avoid going insolvent if they want to maintain control over...

Just over three years after enacting a Minimum Exchange Rate policy for the Swiss Franc vs. Euro (EUR/CHF), the Swiss National Bank (SNB) removed it in a surprise announcement on January 15, 2015. The announcement shocked the FX market — EUR/CHF dropped 25.5 percent in the minutes that...

The paper applies Google's Natural Language sentiment analysis to monetary policy statements and speeches of G3 central banks and examines the role of changes in the tone of statements on exchange rates after the great recession. The results show that one standard deviation increase in the...

This study examines foreign exchange intervention based on novel daily data covering 33 countries from 1995 to 2011. We find that intervention is widely used and an effective policy tool, with a success rate in excess of 80 percent under some criteria. The policy works well in terms of smoothing...