The Optimal Monetary Instrument for Prudential Purposes.
The purpose of this paper is to assess the choice between adopting a monetary base or an interest rate setting instrument to maintain financial stability. Our results suggest that the interest rate instrument is preferable, since during times of a panic or financial crisis the Central Bank automatic...
| Những tác giả chính: | , , |
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| Định dạng: | Working paper |
| Ngôn ngữ: | English |
| Được phát hành: |
Oxford Finance
2008
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| Tóm tắt: | The purpose of this paper is to assess the choice between adopting a monetary base or an interest rate setting instrument to maintain financial stability. Our results suggest that the interest rate instrument is preferable, since during times of a panic or financial crisis the Central Bank automatically satisfies the increased demand for money. Thus, it prevents sharp losses in asset values and enhanced asset volatility. |
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