Hidden Bibliographic Details
| Other authors / contributors: | Ize, Alain.
Kovanen, Arto.
International Monetary Fund. Monetary and Exchange Affairs Department.
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| ISBN: | 1281601284
9781281601285
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| Notes: | Includes bibliographical references (pages 40-42).
Restrictions unspecified
Electronic reproduction. [Place of publication not identified] : HathiTrust Digital Library, 2010.
Master and use copy. Digital master created according to Benchmark for Faithful Digital Reproductions of Monographs and Serials, Version 1. Digital Library Federation, December 2002. http://purl.oclc.org/DLF/benchrepro0212
digitized 2010 HathiTrust Digital Library committed to preserve
Print version record.
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| Summary: | In the textbook monetary paradigm, central banks influence interest rates through controlling monetary aggregates, which are linked to the supply of central bank liabilities through a money multiplier. Hence, central banks' ability to control the supply of their monetary liabilities is considered to be critical. However, central bank (base) money, relative to other means of payment or monetary aggregates, has declined steadily over the last three decades, to the point where its existence and relevance for monetary policy in the future has become an open question. The velocity of reserve money in the G-10 countries has risen by about 60 percent since the beginning of the 1970s (Figure 1).2 At the same time, money multipliers have more than doubled (Figure 2). Both components of base money, banks' reserves and currency in circulation, have declined sharply during the last two decades as a proportion of GDP (Figures 3 and 4). Indeed, in some cases, the demand for settlement balances has fallen to the point where both central banks and commercial banks regularly adopt zero (or near zero) reserves as their day-to-day operational target. 3.
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| Other form: | Print version: Henckel, Timo. Central banking without central bank money. [Washington, D.C.] : International Monetary Fund, Monetary and Exchange Affairs Department, ©1999
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