Central Banking : Theory and Practice in Sustaining Monetary and Financial Stability.

Intro -- Central Banking: Theory and Practice in Sustaining Monetary and Financial Stability -- Copyright -- Contents -- Preface -- Acknowledgments -- About the Author -- Part One: An Introduction to Central Banking -- Chapter 1: A Brief Look at Central Banking History -- 1.1 Prior to Central Banking -- 1.2 Coin Sorting and Storing -- 1.3 Banknote Issuance -- 1.4 Banker to the Government -- 1.5 Banker to Banks -- 1.6 Protector of the Financial System: Lender of Last Resort -- 1.7 Bank Supervisor -- 1.8 Conductor of Monetary Policy -- The Gold Standard and Passive Monetary Policy -- Bretton Woods and the Move toward Activist Monetary Policy -- Taming Inflation: Money Supply Growth Targeting -- Maintaining Monetary Stability: Inflation Targeting -- Common Currency: The Creation of the Euro -- 1.9 The Current Stage of Central Banking -- Commonalities in Modern Central Banking -- Diversity in Modern Central Banking -- Self-Reexamination after the 2007-2010 Global Financial Crisis -- Summary -- Key Terms -- Questions -- Chapter 2: A Brief Overview of the International Monetary System -- 2.1 Evolution of the International Monetary System: Before the End of World War II -- The Gold Standard -- The Gold Exchange Standard -- The Great Depression and the 1930s: Turmoil in the International Financial System -- 2.2 Evolution of the International Monetary System: The Bretton Woods System -- The Bretton Woods System -- The International Monetary Fund -- Pressures on the Bretton Woods System -- The Demise of the Bretton Woods System -- 2.3 After Bretton Woods -- The Great Inflation of the 1970s -- Speculative Attacks on Advanced European and Emerging-Market Currencies in the 1990s -- The Introduction of the Euro -- The Global Financial Crisis of 2007-2010 -- 2.4 Going Forward -- Summary -- Key Terms -- Questions.

Chapter 3: Modern Central Banking Roles and Functions: What Exactly Is a Central Bank? -- 3.1 Modern Central Banking: An Overview of Roles and Functions -- The Ultimate Creator of Money: Money Issuance -- The Regulation of Money Conditions: The Conduct of Monetary Policy -- Payment Systems Oversight and Provision -- Lender of Last Resort -- Bank Supervisor -- 3.2 To Supervise Banks or Not? -- 3.3 So What Exactly Is a Modern Central Bank after All? -- Summary -- Key Terms -- Questions -- Chapter 4: A Brief Review of Modern Central Banking Mandates: What Are the Goals That Modern Central Banks Try to Achieve? -- 4.1 An Overview of Modern Central Banking Mandates -- The Evolving Nature of Mandates -- The Intertwining Nature of Mandates -- A Note on the Full Employment Mandate -- 4.2 Monetary Stability -- Monetary Stability versus Price Stability -- Why It Is Important -- 4.3 Financial Stability -- Liquidity Shortages -- Overindebtedness of Economic Agents -- Why It Is Important -- 4.4 Full Employment -- Why It Is Important -- 4.5 Balancing among the Three Mandates -- Stylizing the Central Bank's Monetary Policy Actions: The Taylor Rule -- Pursuit of the Different Mandates -- Summary -- Key Terms -- Questions -- Part Two: Monetary Stability -- Chapter 5: Theoretical Foundations of the Practice of Modern Monetary Policy -- 5.1 An Overview of Theoretical Foundations -- 5.2 The Quantity Theory of Money -- The Quantity Theory of Money and Hyperinflation -- 5.3 The Phillips Curve -- The Phillips Curve and Economic Fine-Tuning -- 5.4 The Natural Rate of Unemployment -- Nonaccelerating Inflation Rate of Unemployment (NAIRU) -- NAIRU and the Vertical Long-Run Phillips Curve -- Shifting NAIRU -- 5.5 Rational Expectations -- The Lucas Critique -- The Policy Ineffectiveness Proposition -- Irrationality and Other Technical Matters -- 5.6 Time Inconsistency Problem.

Monetary Policy Rules -- The Central Bank's Operational Independence -- 5.7 Taking Them All Together -- Summary -- Key Terms -- Questions -- Chapter 6: Monetary Policy Regimes: What Monetary Policy Rules a Central Bank Can Use to Achieve Monetary Stability -- 6.1 An Overview of Monetary Policy Rules or Monetary Policy Regimes -- 6.2 Exchange Rate Targeting -- A Stylized Model of Exchange Rate Targeting -- Exchange Rate Targeting in the Real World -- 6.3 Money Supply Growth Targeting -- A Stylized Model of Money Supply Growth Targeting -- Money Supply Growth Targeting in the Real World -- 6.4 The Risk Management Approach -- A Stylized Model of the Risk Management Approach: The Taylor Rule -- The Risk Management Approach in the Real World -- 6.5 Inflation Targeting -- A Stylized Model of Inflation Targeting -- Inflation Targeting in the Real World -- 6.6 Unconventional Monetary Policy -- A Stylized Model of Quantitative Easing -- Unconventional Monetary Policy in the United States -- Challenges to Unconventional Monetary Policy -- Summary -- Key Terms -- Questions -- Chapter 7: Monetary Policy Implementation: Financial Market Operations -- 7.1 Central Bank Operations in the Financial Market: An Overview -- The Money Market -- Central Bank's Influences in the Money Market -- 7.2 Transmission of Money Market Interest Rates to Other Interest Rates in the Economy -- The Yield Curve -- 7.3 Monetary Policy and the Yield Curve -- The Effects of the Policy Interest Rate on the Long End of the Yield Curve -- The Yield Curve as a Leading Economic Indicator -- Unconventional Monetary Policy and the Yield Curve -- Summary -- Key Terms -- Questions -- Chapter 8: The Monetary Policy Transmission Mechanism: How Changes in Interest Rates Affect Households, Firms, Financial Institutions, Economic Activity, and Inflation -- 8.1 Monetary Policy and Households' Behavior.

The Intertemporal Substitution Effect: Consumption Today versus Consumption Tomorrow -- The Income Effect -- The Wealth Effect -- The Exchange Rate Effect -- Taking the Four Effects Together: The Effect on Household Consumption and Savings -- 8.2 Monetary Policy and Firms' Behavior -- The Funding Costs Effect -- The Asset Price Effect -- The Exchange Rate Effect -- 8.3 Expectations and Second-Round Effects on Household and Firm Behavior -- The Expectations Effect -- Second-Round Effects -- 8.4 Monetary Policy and Financial Institutions -- The Credit Channel -- The Balance Sheet Channel -- 8.5 Time Lags and Uncertainty in Monetary Policy Transmission -- The Conduct of Monetary Policy Given Time Lags and Uncertainty -- Summary -- Key Terms -- Questions -- Chapter 9: The Exchange Rate and Central Banking -- 9.1 The Exchange Rate, Monetary Stability, Financial Stability, and Macroeconomic Stability -- In Theory -- In Practice -- 9.2 Exchange Rate Regimes -- A Spectrum of Exchange Rate Regimes -- The Rigid Peg End -- The Free-Float End -- The Middle Options -- 9.3 Exchange Rate Theories -- Purchasing Power Parity -- Uncovered Interest Parity (UIP) -- Exchange Rate Market Microstructure -- Implications of Exchange Rate Theories for Exchange Rate Policy -- 9.4 Dealing with the Exchange Rate in Practice -- Dealing with the Exchange Rate: The Macro Concepts -- Dealing with the Exchange Rate: The Operations Level -- Management of Official Foreign Reserves: The Other Side of the Central Bank's Balance Sheet -- Summary -- Key Terms -- Questions -- Part Three: Financial Stability -- Chapter 10: Financial Stability: Definition, Analytical Framework, and Theoretical Foundation -- 10.1 Definitions of Financial Stability -- 10.2 A Practical Analytical Framework: The Macroeconomy, Financial Institutions, and Financial Markets.

The Inherent Interrelationships between the Macroeconomy, Financial Institutions, and Financial Markets -- Financial Stability and the Organization of Central Banks -- 10.3 Financial Stability: Theoretical Foundations -- The Macroeconomy: Interaction between Financial and Economic Cycles -- Financial Institutions: Intermediation, Bank Runs, and Banking System Resiliency -- Financial Markets: Reasons for Market Failures -- Summary -- Key Terms -- Questions -- Chapter 11: Financial Stability: Monitoring and Identifying Risks -- 11.1 Monitoring and Identifying Risks in the Macroeconomy -- The Household Sector -- The Corporate Sector -- The Government Sector -- The External Sector -- Asset Price Bubbles -- The Link between the Macroeconomy and Financial Stability -- 11.2 Monitoring and Identifying Risks to Financial Institutions -- Key Types of Risks to Individual Financial Institutions: Credit, Market, Liquidity, and Operational -- Assessing Individual Institutions' Risks -- Monitoring and Identifying Risks in the Financial Institutions System -- Risk Distribution within the Financial Network -- Risk Concentration: Systemically Important Financial Institutions (SIFIs) -- 11.3 Financial Markets -- Prices and Yields -- Spreads -- Net Open Positions -- Summary -- Key Terms -- Questions -- Chapter 12: Financial Stability: Intervention Tools -- 12.1 The Macroeconomy -- The Debate on the Use of Monetary Policy for the Maintenance of Financial Stability -- Sustaining Financial Stability: Dealing with Threats Against the Macroeconomy Ex Ante -- Sustaining Financial Stability: Dealing with Risks within the Macroeconomy Ex Post -- 12.2 Financial Institutions -- Sustaining Financial Stability: Dealing with Threats to Financial Institutions Ex Ante -- Sustaining Financial Stability: Dealing with Threats to Financial Institutions Ex Post -- 12.3 Financial Markets.

Sustaining Financial Stability: Dealing with Threats to Financial Markets Ex Ante.

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Electronic reproduction. Ann Arbor, Michigan : ProQuest Ebook Central, 2024. Available via World Wide Web. Access may be limited to ProQuest Ebook Central affiliated libraries.