Monetary Impact of a Banking Crisis and the Conduct of Monetary Policy

Author/Editor:

Alicia García-Herrero

Publication Date:

September 1, 1997

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

The experiences of seven countries that have undergone banking crises show that crises have significant implications for the short-run stability of the demand for money, the money multiplier, the transmission mechanism, and the signal variables of monetary policy. Monetary and credit instability, coupled with changes in the nature of the monetary and credit aggregates, complicate monetary management. These findings may require redesigning monetary instruments in favor of faster-reacting instruments, such as open market operations, and introducing additional indicators of the monetary stance, such as asset price and exchange rate movements. More frequent reviews of monetary programs may also be necessary.

Series:

Working Paper No. 97/124

Subject:

English

Publication Date:

September 1, 1997

ISBN/ISSN:

9781451854688/1018-5941

Stock No:

WPIEA1241997

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

83

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