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The financial stability risks of ultra-loose monetary policy

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  • Grégory Claeys
  • Zsolt Darvas

Abstract

• Ultra-loose monetary policies, such as very low or even negative interest rates, large-scale asset purchases, long-maturity lending to banks and forward guidance in central bank communication, aim to increase inflation and output, to the benefit of financial stability. But at the same time, these measures pose various risks and might create challenges for financial institutions. • By assessing the theoretical literature and developments in the United States, United Kingdom...

Suggested Citation

  • Grégory Claeys & Zsolt Darvas, 2015. "The financial stability risks of ultra-loose monetary policy," Policy Contributions 876, Bruegel.
  • Handle: RePEc:bre:polcon:876
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    Cited by:

    1. Maria Demertzis & Guntram B. Wolff, 2020. "What are the prerequisites for a euro area fiscal capacity?," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 23(3), pages 342-358, July.
    2. Ms. Mwanza Nkusu & Ms. Burcu Hacibedel & Nordine Abidi, 2016. "Changing Times for Frontier Markets: A Perspective from Portfolio Investment Flows and Financial Integration," IMF Working Papers 2016/177, International Monetary Fund.
    3. AAlessio Reghezza & Jonathan Williams & Alessio Bongiovanni & Riccardo Santamaria, 2019. "Do Negative Interest Rates Affect Bank Risk-Taking?," Working Papers 19012, Bangor Business School, Prifysgol Bangor University (Cymru / Wales).
    4. Thomas Theobald & Silke Tober & Emanuel List, 2015. "Finanzmarktstabilität in Zeiten unkonventioneller Geldpolitik," IMK Report 107-2015, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    5. Nasir, Muhammad Ali, 2021. "Zero Lower Bound and negative interest rates: Choices for monetary policy in the UK," Journal of Policy Modeling, Elsevier, vol. 43(1), pages 200-229.
    6. Emmanuel C. Mamatzakis & Anh N. Vu, 2017. "The interplay between quantitative easing and risk: the case of the Japanese banking," Working Papers 226, Bank of Greece.
    7. International Monetary Fund, 2016. "Slovak Republic: Selected Issues," IMF Staff Country Reports 2016/014, International Monetary Fund.

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