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Challenges for monetary policy

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  • Issing, Otmar

Abstract

The financial crisis which started in 2007 has caused a tremendous challenge for monetary policy. The simple concept of inflation targeting has lost its position as state of the art. There is a debate on whether the mandate of a central bank should not be widened. And, indeed, monetary policy has been very accommodative in the last couple of years and central banks have modified their communication strategies by introducing forward guidance as a new policy tool. This paper addresses the consequences of these developments for the credibility, the reputation and the independence of central banks. It also comments on the recent debate among economists concerning the question whether the ECB's OMT program is compatible with its mandate.

Suggested Citation

  • Issing, Otmar, 2013. "Challenges for monetary policy," SAFE White Paper Series 7, Leibniz Institute for Financial Research SAFE.
    • Handle: RePEc:zbw:safewh:7
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    References listed on IDEAS

    as
    1. Issing, Otmar, 2013. "A new paradigm for monetary policy?," CFS Working Paper Series 2013/02, Center for Financial Studies (CFS).
    2. Marvin Goodfriend, 2012. "The Elusive Promise of Independent Central Banking," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 30, pages 39-54, November.
    3. Otmar Issing, 2013. "A New Paradigm for Monetary Policy?," International Finance, Wiley Blackwell, vol. 16(2), pages 273-288, June.
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    Cited by:

    1. Winkler Adalbert, 2015. "The ECB as Lender of Last Resort: Banks versus Governments," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 235(3), pages 329-341, June.
    2. Winkler, Adalbert, 2014. "The lender of last resort in court," Frankfurt School - Working Paper Series 207, Frankfurt School of Finance and Management.

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    Keywords

    ECB; OMT; central banking;
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