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Correlation between the use of derivatives products and the implementation of the monetary policy


  • Mircea CIOLPAN
  • Anduena FIRTAT

    (University of Craiova)


In a developing and fluctuant world, derivatives help the investors to avoid risks and moreover to assume them when it is necesary. The trade of the derivatives contributes to the growth of liquidity of the assets’ market. For the banks, which traditionally avoid risks, this fact combined with low costs for communication and trading, lead to some potential risky investments. The materialization of monetary policy is based on the idea that the needs of the real economy are expressed through the bankimg system, and the changes of the monetary policy influence the evolution of the economy. In this way, the monetary authority has to promote a proper policy, which can lead to the achievement of its main objective – price stability. The use of derivatives made the central bank mission more difficult. The authorities have a difficult task in order to establish new methods, more powerful, for a better implementaton of the monetary policy. In a dynamic environment the equilibrium is not permanent; this is the reason why the central bank and the financial markets participants must prevent first, and then avoid the possible repairs.

Suggested Citation

  • Mircea CIOLPAN & Anduena FIRTAT, 2008. "Correlation between the use of derivatives products and the implementation of the monetary policy," Finante - provocarile viitorului (Finance - Challenges of the Future), University of Craiova, Faculty of Economics and Business Administration, vol. 1(7), pages 203-210, May.
  • Handle: RePEc:aio:fpvfcf:v:1:y:2008:i:7:p:203-210

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    derivative; monetary policy; risk management; financial markets;

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy


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