The pre-crisis monetary policy implementation framework

Arbeitspapier

This paper describes the Federal Reserve's framework for implementing monetary policy prior to the expansion of the Fed's balance sheet during the financial crisis. The pre-crisis framework was a reserve-scarcity regime in which banks demanded reserves in order to meet minimum reserve requirements. The New York Fed's open market trading desk implemented monetary policy by carefully managing the supply of reserves, primarily through the conduct of daily repo operations with primary dealers. The open market trading desk was able to achieve its monetary policy implementation objectives efficiently in the pre-crisis period without impairing financial market functioning. However, the framework deployed was complex relative to alternative implementation frameworks and required substantial intraday overdrafts from the Fed to meet banks' short-term payment needs. Once its balance sheet expanded in response to the financial crisis, the Fed was no longer able to rely on the pre-crisis framework to control the policy rate. Nevertheless, the open market trading desk successfully controlled the policy rate using the new, post-crisis framework, suggesting that effective monetary control may be achieved through different frameworks.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Staff Report ; No. 809

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Monetary Policy ; Central Banks and Their Policies ; Economic History: Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations: General, International, or Comparative
• Thema: Fed ; monetary policy framework ; pre-crisis

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Kroeger, Alexander ; McGowan, John ; Sarkar, Asani
• Ereignis: Veröffentlichung
• (wer): Federal Reserve Bank of New York
• (wo): New York, NY
• (wann): 2017

Weitere Informationen

• Handle: http://hdl.handle.net/10419/189850
• Letzte Aktualisierung: 10.03.2025, 11:44 MEZ