European Central Bank -Conventional And/Or Unconventional Instruments For Monetary Policy

Authors : Klimentina POPOSKA, Elena MIHAJLOSKA, İskra STANCHEVAGİGOV

Pages : 35-45

Doi:10.25095/mufad.402229

View : 28 | Download : 9

Publication Date : 2017-07-15

Article Type : Research Paper

Abstract :The mechanisms the monetary policies have failed to foresee, not to mention to  prevent the 2008 Financial Crisis insert ignore into journalissuearticles values(FC);. Moreover the burst of the crisis has challenged  the market mechanism for maintaining market liquidity, financial stability and risk  management. The European Central Bank insert ignore into journalissuearticles values(ECB); has played crucial role in the  aftermath of the 2008 FC for maintaining the market liquidity. The measures taken in  the post crisis period were conflicting with the basic foundations of the monetary policy  of EMU, but prevented the collapse of the financial market. While the ECB has  successfully controlled inflation levels and maintained market liquidity failed to spur  growth as expected. The paper discusses the challenges that emerge from these policy  measures and provides a recommendation for future actions. Moving away from these  measures has been emphasized as one of the main challenges with exiting too early and  too late being equally dangerous. The discussion continues with the analysis of the  effects and implication in practice of ECB Instruments and their future utilization. The  question rises whether the monetary policy should go back to the conventional  instruments or maintain excess liquidity and operate the system through parallel  adjustments to the deposit facility rate and the rate on the main refinancing operations.
Keywords : European Central Bank, Instruments forMonetary policy, EU, Unconventional measures, Financila Crisis