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Central banks and different policies implemented in response to the recent Financial Crisis

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  • Ojo, Marianne

Abstract

Rescue cases involving guarantees (contrasted with restructuring cases) during the recent Financial Crisis, have illustrated the prominent position which the goal of promoting financial stability has assumed over that of the prevention or limitation of possible distortions of competition which may arise when granting State aid. The recent Financial Crisis has also illustrated how the traditional role of central banks has been extended to incorporate more innovative roles. The reduction of interest rates by central banks to all time lows – along with other unprecedented actions which have been undertaken by central banks, as evidenced by the recent Financial Crisis, have been regarded as „extensions of traditional methods of operation which have resulted in a new territory in which tools have been implemented in very new ways.“ As well as providing an analysis of how the traditional role of central banks has evolved through the duration of the Financial Crisis, this paper attempts to highlight how far central banks and governments should intervene and how far distortions of competition should be permitted during periods of financial crises.

Suggested Citation

  • Ojo, Marianne, 2010. "Central banks and different policies implemented in response to the recent Financial Crisis," MPRA Paper 26605, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:26605
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    File URL: https://mpra.ub.uni-muenchen.de/26605/1/MPRA_paper_26605.pdf
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    File URL: https://mpra.ub.uni-muenchen.de/70898/1/MPRA_paper_26605.pdf
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    References listed on IDEAS

    as
    1. Gruen, David & Pagan, Adrian & Thompson, Christopher, 1999. "The Phillips curve in Australia," Journal of Monetary Economics, Elsevier, vol. 44(2), pages 223-258, October.
    2. Jordi Galí, 2011. "The Return Of The Wage Phillips Curve," Journal of the European Economic Association, European Economic Association, vol. 9(3), pages 436-461, June.
    3. Granger, C. W. J., 1981. "Some properties of time series data and their use in econometric model specification," Journal of Econometrics, Elsevier, vol. 16(1), pages 121-130, May.
    4. Leonhard Dobusch & Jakob Kapeller, 2009. ""Why is Economics not an Evolutionary Science?" New Answers to Veblen's Old Question," Journal of Economic Issues, Taylor & Francis Journals, vol. 43(4), pages 867-898.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    competition; central banks; recapitalisation; stability; regulation; financial crises; fundamentally sound financial institutions; macro prudential; Basel III; systemic risk; supervision; liquidity; state aid; monetary policy;

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • K2 - Law and Economics - - Regulation and Business Law
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G01 - Financial Economics - - General - - - Financial Crises

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