Financial innovations effects on monetary policy making
Part of : Αρχείον οικονομικής ιστορίας ; Vol.XVIII, No.2, 2006, pages 155-164
Issue:
Pages:
155-164
Author:
Abstract:
The dynamics established by the innovations on financial markets since the mid–seventies have raised a whole series of new problems regarding both the theoretical approach to and the implementation of a policy of monetary control. Thus, there are reasons to doubt the possibility of effectively controlling the money supply in a situation characterized by radical financial innovation. Careful analysis of the causes of financial activities reveals that closer substitution relationships evolve between the specific financial elements, of which the total money supply consists, that affect the relationship between the monetary and real figures of the economy. This finding leads to the need for a redirection in monetary policy formation by the central banks.
Subject:
Subject (LC):
Keywords:
Financial Innovations, Monetary Policy
Notes:
JEL classification: E5, E51, E52, G1, G38
