E50 - Monetary Policy, Central Banking, and the Supply of Money and Credit: GeneralNávrat zpět

The paper explains modern liquidity crisis and financial contagion from shadow banking system to money market in 2007-2009. Liquidity shock was massive due to high connectivity with the quality of underlying (securitized) assets. Thus, the problem of solvency was main driver of the liquidity crisis on the interbank market. Counterparty risk was transmitted to the money market through various channels: direct or indirect exposition to shadow banking, confidence channel, asset price channel and wholesale funding run. The structure of paper is following: first part analyzes financial market infrastructure of shadow banking, wholesale funding (originate-to-distribute) model and ABCP market; the second one describes financial market turmoil and contagion to the money market. Liquidity crisis strongly hit many segments of the money market: unsecured money market, repo market, FX swap market, Eurodollar market. Liquidity crisis was severe due to strong correlation between counterparty risk and liquidity premium as well between funding and market liquidity. Monitoring of the main causes of the liquidity crisis in his early stages is important for the fast reaction by central banks in terms of collateral quality and quantity of the reserve´s supply.

Since 2014, European Central Bank and Bank of Japan have entered into the unchartered water of modest negative nominal interest rates, when they broke zero lower bound. Large-scale asset purchases and forward guidance effects are limited by zero nominal bound if yield curve is absolutely flat. Negative interest rate has been implemented with the aim of reinforcing effects of unconventional monetary policy and lowering real interest rates. Therefore, another decrease in nominal yield curve should ensure, that inflation target will be met in a medium term horizon. Main goal of the paper is to reveal implementation, transmission channels and risks associated with the negative interest rates. Implementation was successful within the existing framework of the current monetary policy. Negative effective interest rate has been reflected in sharp drop of governments yield curve and mortgage rates. According current constellation of negative interest rates, monetary effect outperforms potential unintended impacts. On the other side, there are many risks mainly for financial stability and financial market functioning, if negative interest rates will be under effective zero lower bound or will persists for an extended period.

The paper explains wider economic, financial and macroeconomic context of the unconventional monetary policy during 2001-2006 in Japan. The objective of the article is complex discussion of Bank of Japan's unconventional monetary policy measures from theoretical and practical point of view. The structure of the papers is following: the fi rst part reveals macroeconomic condition behind unconventional monetary policy, the second part describes changes in monetary policy implementation, focuses also on commercial assets purchasing and describes exit strategy as well. The last part of the paper evaluates unconventional monetary policy impacts. Bank of Japan achieved accommodative financial condition and reduced uncertainty in the money market. Large liquidity buffer works preventive in case of unexpected liquidity shocks. Excess ample liquidity did not support prices and real economic activity considering broader deleveraging process and corporate markets fragmentation. Entry and exits strategy was successful without financial markets disruption but exit was not complete. Finally, the paper can conclude, that unconventional monetary policy had positive stabilization effect without significant transmission to the real economy.

The demand for cash in the Czech Republic is characterized since the establishment of the Czech currency in 1993 by a steady upward trend that has been disrupted by several non-standard episodes. One of the episodes was a substantial surge in Czech currency holdings after the outbreak of the financial crisis in late 2008. Results based on a model of currency demand show that the increase in currency in circulation in the last quarter of 2008 cannot be explained by common variables, which include retail sales, interest rate, innovation in payment systems, and tourism. Separate models of currency demand for small and large denominations revealed significant differences in terms of sensitivity to different variables. While small-value banknotes are mainly driven by domestic transactions, payment system innovations and tourism, the demand for large-value banknotes depends more on a short-term interest rate. Increased currency demand had to be explicitly modeled only in case of high-denomination banknotes and was best explained by the confidence indicator.

The article discusses the approaches and options for identification of equilibrium exchange rate. It focuses mainly on the outcomes of behavioural (BEER) and fundamental (FEER) model of the equilibrium exchange rate of the Czech Koruna, which are presented in both nominal and real terms. The results of both models of equilibrium exchange rate (BEER and FEER) showed significant long-term appreciation trend, mainly due to faster growth in labour productivity in the Czech Republic compared to the euro area. The results also confirmed the estimates of exchange rate overvaluation by mid-1997 and in 1998, 2002 and 2008. Since 2009, the model suggests a significant slowdown in the appreciation of the equilibrium mainly due to slowing domestic growth rate of labor productivity compared to the euro area.

The article aims to show both the still very strong position of the USD in the global financial system and assess its likely future position. It illustrates that although the U.S. is no longer the dominant global economic power that it was when the dollar became the global reserve currency, the dollar so far is not in immediate danger of losing its privileged position. Despite the challenges facing the USD as the global reserve currency, it continues its dominant role since no other currency has shown itself strong and credible enough to replace it. Considerations on replacing dollar with other currency are no more than a speculation.

The paper deals with the monetary policy of the European Central Bank and its effects on economic development of the Czech economy and other new members of EU from the perspective of Post-Keynesian monetary economics. In the first part the basic principles of contemporary Post-Keynesian monetary theory of relative endogeneity of money are shortly presented. The second part concentrates on the Post-Keynesian criticism of the institutional arrangement of the ECB and its monetary policy. The closing part treats issues concerning potential effects of the policy of ECB in the given institutional framework on economic development of the Czech economy and economies of other less developed members of EU after joining the Eurozone. Possible adverse effects on the process of real convergence are discussed and alternative policies eliminating this danger are presented.

The first question that we ask ourselves in our article is whether the accounting of the central bank is supposed to respect the principles of internationally accepted standards (especially the International Financial Reporting Standards). We are looking for the basic differences in understanding of terms such as (il)liquidity and (in)solvency on the level of central and commercial banking. We analyze the economic reasons for origination of the long foreign exchange position of the ČNB which, under the circumstances of trend appreciation of the exchange rate of the Czech crown, is leading to a cumulative loss. We are discussing whether the current level of foreign exchange reserves of the ČNB is excessive or adequate. Special attention is paid to the monetary and financial impact of the loss of the central bank. We are pointing out that losing the central bank means profit for market subjects at the same time. It is not just a "fictitious" accounting problem and it can have its factual impact on the national economy. At the end we are summarizing and assessing the individual opinions regarding the loss of the ČNB.

This paper deals with the evolution of currency in circulation and world trends in selected developed countries. We argue against the opinion that money in their cash form (i.e. notes and coins) will seize to exist within the horizon of fifteen years and that only electronic means of payment will be used in the users' payment mix. We quantify and compare the trend of currency in circulation with main macroeconomic and demographic indicators and focus on finding and defining possible additional qualitative factors that might influence the usage of banknotes and coins. Paper offers a new approach to rising currency in circulation which is not based on quantitative factors but more on the qualitative factors which motivate users to use cash. Furthermore the paper focuses on the regional aspect and describes and compares the cash situation in the Czech Republic. Based on the defined qualitative factors, which are promoting the use of cash and motivating potential users of cash, we come to the conclusion that cash will play its important role in the future as a reliable, safe and user friendly mean of payment.

During 1930s and 1940s Josef Macek developed monetary theory leading to monetary policy recommendations which are deeply influenced by macroeconomic theory of John Maynard Keynes. Macek became leading Czech left-wing keynesian. His theory of money was nominalist and similarly to J. M. Keynes and G. Cassel he elaborated the concept of managed fiat money. He critisized and disapproved the quantity theory of money. In his monetary theory and his monetary policy conclusions he was a forerunner of contemporary post-keynesian monetary theories. Money supply is in his monetary theory highely endogenous and he expressed certain doubts about effeciency of monetary policy measures as antirecessionary remedy.

The article provides a general description of the world money development in both developed and developing countries during the second half of 20th century. We were primarily focusing on the long run trends in dollar gold prices, monetary aggregates (broad and narrow money), foreign exchange reserves, inflation and interest rates. We found that after relatively tranquil periods of fifties and sixties, next three decades witnessed dramatic changes in the world economy. The emphasis that was given to the analysis of the relation of the dollar gold prices to the world reserve currencies (EUR, CHF, GBP and JPY) by means of state-space model confirmed negative correlation between these variables. Subsequently we discussed a concept of neutrality and superneutrality of money in the light of GDP dynamics during monitored period and practical aspects of monetary policy. In spite of some recent empirical findings, we express our belief in the long-run neutrality and superneutrality of money and in relative non-activistic monetary policy with price stability as its primary goal.

In the inflation targeting regime the central bank makes a decision about interest rate adjustment based on a forecast, primarily of inflation. Thus a big part of the decisions on interest rate adjustments corresponds to systematic response of central bank to expected economic development. The systematic part of monetary policy - the decision pattern of central bank (similarly as behaviour of other economic agents) must be approximated for purposes of creating a forecast. The aim of this article is to approximate it through estimated monetary policy rule.

This study stress attention to the effects of imperfect competitive markets, menu costs and firm near rationality upon nominal price rigidity and non-neutrality of money in works of new keynesian economists. New keynesians consider the price rigidity as a direct expression of the firm price decisions in the context of the nominal aggregate demand shock initiated by change in the central bank money supply. But such case of nominal price stability is the result of firm price decision only when it meets combination of "right" parametres of firm demand and supply function, it means "right" slope of marginal revenue and marginal costs function and their stability (anti-cyclical movements of the mark-ups) that is based above all on high firm monopoly power and high elasticity of labor supply. Explanation of the price rigidity should therefore put together the influence of menu costs and near rationality with real price and wage rigidities.

The aim of the article is a systemic summarization of processes, ways and main determinants influencing the relation between costs and benefits connected with the CR accession to the European Union. Author attempts to find out and to classify moments on macroeconomic both microeconomic level which are relevant for maximization of the realized economic effect. New conditions of the EU single market and importance of quick adaptation of enterprises' activities to them are being discussed.