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The International Transmission of Monetary Policy

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  • Claudia M. Buch
  • Matthieu Bussiere
  • Linda Goldberg
  • Robert Hills

Abstract

This paper presents the novel results from an internationally coordinated project by the International Banking Research Network (IBRN) on the cross-border transmission of conventional and unconventional monetary policy through banks. Teams from seventeen countries use confidential micro-banking data for the years 2000 through 2015 to explore the international transmission of monetary policies of the U.S., euro area, Japan, and United Kingdom. Two other studies use international data with different degrees of granularity. International spillovers into lending to the private sector do occur, especially for U.S. policies, and bank-specific heterogeneity influences the magnitudes of transmission. The effects are supportive of the international bank lending channel and the portfolio channel of monetary policy transmission. They also show that the frictions that banks face matter; in particular, foreign currency funding and hedging considerations can be a key source of heterogeneity. The forms of bank balance sheet heterogeneity that differentiate spillovers across banks are not uniform across countries. International spillovers into lending can be large for some banks, even while the average international spillovers of policies into nonbank lending generally are not large.

Suggested Citation

  • Claudia M. Buch & Matthieu Bussiere & Linda Goldberg & Robert Hills, 2018. "The International Transmission of Monetary Policy," NBER Working Papers 24454, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:24454
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    Cited by:

    1. Bahaj, Saleem & Reis, Ricardo, 2018. "Central bank swap lines," LSE Research Online Documents on Economics 90374, London School of Economics and Political Science, LSE Library.
    2. repec:eee:jimfin:v:90:y:2019:i:c:p:34-53 is not listed on IDEAS
    3. Argimon, Isabel & Bonner, Clemens & Correa, Ricardo & Duijm, Patty & Frost, Jon & de Haan, Jakob & de Haan, Leo & Stebunovs, Viktors, 2019. "Financial institutions’ business models and the global transmission of monetary policy," Journal of International Money and Finance, Elsevier, vol. 90(C), pages 99-117.
    4. Luís A.V. Catão & Daniel Marcel te Kaat, 2018. "Capital Account Liberalization and the Composition of Bank Liabilities," Working Papers REM 2018/53, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    5. Lindner, Peter & Loeffler, Axel & Segalla, Esther & Valitova, Guzel & Vogel, Ursula, 2019. "International monetary policy spillovers through the bank funding channel," Journal of International Money and Finance, Elsevier, vol. 90(C), pages 161-174.
    6. Jon Frost & Patty Duijm & Clemens Bonner & Leo Haan & Jakob Haan, 2019. "International Lending of Dutch Insurers and Pension Funds: the Impact of ECB Monetary Policy and Prudential Policies in the Host Country," Open Economies Review, Springer, vol. 30(3), pages 445-456, July.
    7. Hills, Robert & Ho, Kelvin & Reinhardt, Dennis & Sowerbutts, Rhiannon & Wong, Eric & Wu, Gabriel, 2019. "The international transmission of monetary policy through financial centres: Evidence from the United Kingdom and Hong Kong," Journal of International Money and Finance, Elsevier, vol. 90(C), pages 76-98.
    8. Carlo Alcaraz & Stijn Claessens & Gabriel Cuadra & David Marques-Ibanez & Horacio Sapriza, 2018. "Whatever it takes. What's the impact of a major nonconventional monetary policy intervention?," BIS Working Papers 749, Bank for International Settlements.
    9. repec:eee:jimfin:v:89:y:2018:i:c:p:50-66 is not listed on IDEAS
    10. repec:eee:jimfin:v:89:y:2018:i:c:p:154-174 is not listed on IDEAS
    11. repec:eee:jimfin:v:90:y:2019:i:c:p:175-186 is not listed on IDEAS
    12. Schmidt, Julia & Caccavaio, Marianna & Carpinelli, Luisa & Marinelli, Giuseppe, 2018. "International spillovers of monetary policy: Evidence from France and Italy," Journal of International Money and Finance, Elsevier, vol. 89(C), pages 50-66.
    13. Andrew Filardo & Pierre Siklos, 2018. "The cross-border credit channel and lending standards surveys," BIS Working Papers 723, Bank for International Settlements.
    14. Barbosa, Luciana & Bonfim, Diana & Costa, Sónia & Everett, Mary, 2018. "Cross-border spillovers of monetary policy: What changes during a financial crisis?," Journal of International Money and Finance, Elsevier, vol. 89(C), pages 154-174.
    15. Gajewski, Krzysztof & Jara, Alejandro & Kang, Yujin & Mok, Junghwan & Moreno, David & Serwa, Dobromił, 2019. "International spillovers of monetary policy: Lessons from Chile, Korea, and Poland," Journal of International Money and Finance, Elsevier, vol. 90(C), pages 175-186.
    16. Anna Kruglova & Konstantin Styrin & Yulia Ushakova, 2018. "Transmission of foreign monetary shocks to a small open economy under structural instability: the case of Russia," Bank of Russia Working Paper Series wps38, Bank of Russia.
    17. Avdjiev, Stefan & Koch, Cathérine & McGuire, Patrick & von Peter, Goetz, 2018. "Transmission of monetary policy through global banks: Whose policy matters?," Journal of International Money and Finance, Elsevier, vol. 89(C), pages 67-82.
    18. Auer, Simone & Friedrich, Christian & Ganarin, Maja & Paligorova, Teodora & Towbin, Pascal, 2019. "International monetary policy transmission through banks in small open economies," Journal of International Money and Finance, Elsevier, vol. 90(C), pages 34-53.
    19. repec:bkr:journl:v:77:y:2018:i:2:p:81-94 is not listed on IDEAS
    20. Isabel Argimón, 2018. "The relevance of currency-denomination for the cross-border effects of monetary policy," Working Papers 1827, Banco de España;Working Papers Homepage.

    More about this item

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • F30 - International Economics - - International Finance - - - General
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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