Introduction to Monetary Operations - Revised, 2nd Edition
AbstractMonetary operations typically aim to achieve monetary stability; but, under this broad umbrella, the monetary authorities need to decide which specific targets to aim at, and which policy instruments should be used. For most countries the final long-term monetary target of the central bank is low and stable inflation. For operational purposes, however, the day-to-day target is usually to achieve a particular level of interest rates, commercial banks’ reserves or the exchange rate. In market economies it is widely held that in the long run the most efficient instruments of monetary policy are those which best complement the workings of a market system. This is why indirect and market-based instruments are preferred to administrative controls. The latter may work for a while, but tend to distort markets and are open to evasion. This handbook examines the various different indirect instruments - i. reserve requirements, which have some of the characteristics of administrative controls; ii. open market operations; and iii. standing facilities. The last two types of instruments are market-based (voluntary) transactions. Open market operations are undertaken at the initiative of the central bank whereas standing facilities are used at the initiative of the commercial banks. The Handbook then discusses how different instruments may be combined in an overall framework for monetary operations. A certain amount of detail is given about current practice in the United Kingdom (UK) and in other countries, not to be prescriptive but to give some impression of the varying balance of instruments in the monetary policy framework of different countries. Since monetary operations are continuously evolving, some of the detail described herein as current practice may become out-of-date, but the general principles and analysis should remain valid. This handbook is also available in Russian, Spanish and Arabic.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoThis book is provided by Centre for Central Banking Studies, Bank of England in its series Handbooks with number 10 and published in 2000.
ISBN: 1 85730 187 0 (English) 1 85730 105 6 (Russian)
Contact details of provider:
Postal: Threadneedle Street, London, EC2R 8AH
Phone: +44 (020) 7601 4444
Fax: +44 (020) 7601 5460
Web page: http://www.bankofengland.co.uk/education/Pages/ccbs/default.aspx
More information through EDIRC
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Laura Valderrama & Wendell A. Samuel, 2006. "The Monetary Policy Regime and Banking Spreads in Barbados," IMF Working Papers 06/211, International Monetary Fund.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Maria Brady).
If references are entirely missing, you can add them using this form.