Monetary Impact of a Banking Crisis and the Conduct of Monetary Policy
September 1, 1997
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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.
Subject: Banking, Banking crises, Commercial banks, Credit, Demand for money, Financial crises, Financial institutions, Monetary aggregates, Money
Keywords: Argentina, Baltics, bank, bank problem, Banking crises, central bank, Commercial banks, Credit, crisis, Demand for money, distressed bank, excess reserves, la Nación, Monetary aggregates, monetary management, money multiplier, Venezuela, WP
Pages:
83
Volume:
1997
DOI:
Issue:
124
Series:
Working Paper No. 1997/124
Stock No:
WPIEA1241997
ISBN:
9781451854688
ISSN:
1018-5941
