May 16, 2016
E58 - Central Banks and Their Policies
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May 16, 2016
Monetary Policy Frameworks: Recent International Developments
Inflation-targeting frameworks have remained relatively stable over the past few years despite significant challenges, including prolonged low inflation, a large negative commodity price shock and rising financial stability concerns in some economies. The tools used by central banks have, however, evolved substantially. This article provides a survey of the developments in the inflation-targeting frameworks of 10 central banks in advanced economies that correspond to the three research areas of the Bank of Canada’s 2016 renewal: the level of the inflation target, the measurement of core inflation and financial stability considerations in the formulation of monetary policy. -
A Bitcoin Standard: Lessons from the Gold Standard
This paper imagines a world in which countries are on the Bitcoin standard, a monetary system in which all media of exchange are Bitcoin or are backed by it. The paper explores the similarities and differences between the Bitcoin standard and the gold standard and describes the media of exchange that would exist under the Bitcoin standard. -
Wait a Minute: The Efficacy of Discounting versus Non-Pecuniary Payment Steering
Merchants who accept credit cards face payment processing fees. In most countries, the no-surcharge rule prohibits them from using surcharges to pass these fees on to customers. -
Understanding Firms’ Inflation Expectations Using the Bank of Canada’s Business Outlook Survey
Inflation expectations are a key determinant of actual and future inflation and thus matter for the conduct of monetary policy. We study how firms form their inflation expectations using quarterly firm-level data from the Bank of Canada’s Business Outlook Survey, spanning the 2001 to 2015 period. -
Estimating Canada’s Effective Lower Bound
In 2009, the Bank of Canada set its effective lower bound (ELB) at 25 basis points (bps). Given the recent experience of Sweden, Denmark, Switzerland and the euro area with negative interest rates, we examine the economics of negative interest rates and suggest that cash storage costs are the source of a negative lower bound on interest rates. -
On the Essentiality of E-Money
Recent years have witnessed the advances of e-money systems such as Bitcoin, PayPal and various forms of stored-value cards. This paper adopts a mechanism design approach to identify some essential features of different payment systems that implement and improve the constrained optimal resource allocation. -
November 19, 2015
Recent Enhancements to the Management of Canada’s Foreign Exchange Reserves
As the size and complexity of the foreign exchange reserves have grown over the years, enhancements to the management framework needed to keep pace. This is a common theme for most reserve managers around the world. In Canada, the enhancements focused on governance, portfolio management, risk measurement and risk management. This article briefly describes these enhancements, why they were implemented and some of the lessons learned along the way. -
Reputational Risk Management in Central Banks
This paper discusses reputational risk in the context of central banking and explains why it matters to central banks. It begins with a general discussion of reputational risk within the broader framework of risk management. -
Forward Guidance at the Effective Lower Bound: International Experience
Forward guidance is one of the policy tools that a central bank can implement if it seeks to provide additional monetary stimulus when it is operating at the effective lower bound (ELB) on interest rates. It became more widely used during and after the global financial crisis.