The Unconventional Monetary Policies Implemented by the Bank of England, U.S. Federal Reserve and the European Central Bank in Response to the Financi

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The unconventional monetary policies implemented by the Bank of England, U.S. Federal Reserve and the European Central Bank in response to the financial crisis The signification of the financial crisis followed the collapse of Lehman Brothers in September 2008 caused the decrease in the market activity and the growth of globalization economy. A vast of problems, such as deflation, reduction in capital liquidity and so forth, confront with each government and central bank as well as having significant negative effect on development of economy that lowering of GDP. After the financial crisis erupting and spreading to all around the world’s financial condition, some measures for example, lowering of interest rate and keeping the reserve requirement lowing, implemented by central banks aimed at stabilize market price and funds liquidity to support aggregate demand. However, actually, the central banks’ interest rate is very low in United Kingdom, European system and United Stated, which is closing to zero bound, so that it is difficult for central banks to maintain financial condition and support a further stimulation via tool of interest rate (Benford et al, 2009). Meanwhile, commercial banks reduced the aggregate of bank loans in order to remain sufficient reserve and prevent their value of assets, because not enough money expand their investment to profit with high risk investing environment. Therefore, Bank of England, European Central Bank and U.S. Federal Reserve generate a series of non-standard monetary policies called unconventional monetary policies to avoid the threat of a liquidity trap (Loisel and Mesonnier, 2009). This essay will discuss what unconventional monetary policies implemented by Bank of England, European... ... middle of paper ... ...8, 2009. 5. Curdia. V, and M. Woodford, 2010. Conventional and Unconventional Monetary Policy. Federal Reserve Bank of St. Louis Review, 92 (4), pp.229-264. 6. European Central Bank, 2010. The ECB’s Response to The Financial Crisis. ECB Monthly Bulletin. 7. Fleming, Michael J, W. B, Hrung, and F. M, Keane, 2010. Repo Market Effects of the TSLF. American Economic Review, 100 (2), pp.591-596. 8. Joyce. Michael. A. S, A. Lasaosa, I. Stevens, and M. Tong, 2011. The Financial Market Impact of Quantitative Easing in the United Kingdom. International Journal of Central Banking, 7 (3), pp.113-161. 9. Loisel. O, and J. S, Mesonnier, 2009. Unconventional Monetary Policy Measures In Response to the Crisis. Banque of France, NO.1, pp. 1-13. 10. Meier. A, 2009. Panacea, Curse, or Nonevent? Unconventional Monetary Policy in the United Kingdom. International Monetary Fund .
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