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A descriptive analysis of the balance sheet and monetary policy of De Nederlandsche Bank: 1900-1998 and beyond

  • Christiaan Pattipeilohy
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    This paper investigates developments in the balance sheet and monetary policy of De Nederlandsche Bank in the period 1900-1998. We find that - given the institutional framework which is applicable - the composition of DNB's balance sheet is to a large extent endogenous to monetary and financial-economic conditions. Historically, the Bank's implementation of monetary policy was geared primarily towards the market for foreign exchange and the Dutch banking sector. However, it has not been uncommon for the Bank to also hold a portfolio of government bonds for monetary policy purposes. Our analysis suggests that monetary policy, its instruments and intermediate targets should not be viewed as fixed and unalterable concepts. Changing conditions and relations within the economy may warrant or even require innovations in the monetary policymakers' toolbox. Clear communication is important to manage expectations on what can and cannot be expected from conventional and (previously) less conventional monetary policy measures.

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    File URL: http://www.dnb.nl/en/binaries/OS_tcm47-291412.pdf
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    Paper provided by Netherlands Central Bank, Research Department in its series DNB Occasional Studies with number 1103.

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    Date of creation: May 2013
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    Handle: RePEc:dnb:dnbocs:1103
    Contact details of provider: Postal: Postbus 98, 1000 AB Amsterdam
    Web page: http://www.dnb.nl/en/

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    1. Kotaro Ishi & Kenji Fujita & Mark R. Stone, 2011. "Should Unconventional Balance Sheet Policies Be Added to the Central Bank toolkit? a Review of the Experience so Far," IMF Working Papers 11/145, International Monetary Fund.
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    7. Jakob de Haan & Willem van den End & Jon Frost & Christiaan Pattipeilohy & Mostafa Tabbae, 2013. "Unconventional Monetary Policy of the ECB during the Financial Crisis: An Assessment and New Evidence," SUERF 50th Anniversary Volume Chapters, SUERF - The European Money and Finance Forum.
    8. Fabrizio Zampolli, 2012. "Sovereign debt management as an instrument of monetary policy: an overview," BIS Papers chapters, in: Bank for International Settlements (ed.), Threat of fiscal dominance?, volume 65, pages 97-118 Bank for International Settlements.
    9. Sinn, Hans-Werner & Wollmershäuser, Timo, 2012. "Target loans, current account balances and capital flows: The ECB’s rescue facility," Munich Reprints in Economics 19556, University of Munich, Department of Economics.
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    11. Ulrich Bindseil & Philipp Johann König, 2012. "TARGET2 and the European Sovereign Debt Crisis," Credit and Capital Markets, Credit and Capital Markets, vol. 45(2), pages 135–174.
    12. Rolnick, Arthur J & Weber, Warren E, 1997. "Money, Inflation, and Output under Fiat and Commodity Standards," Journal of Political Economy, University of Chicago Press, vol. 105(6), pages 1308-21, December.
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