european economics

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European economics
The “Unconventional monetary policy in theory and in practice” which is written by Cecioni, Ferrero and Secchi, provide vital information that pertains to the unconventional monetary policy. According to the writers, central banks often have the mandate of making various explanations to the public of how various monetary activities and objectives can be used to ensure the fulfillment of various goals and objectives of organizations and nations at large. During such events the central banks also provide information about various changes that might occur in different microeconomic variables or the policies they intend to implement to ensure growth and developments in their jurisdictions.
The paper is relevant to issues of economic theory and unconventional monetary policies in particular and confirms that most monetary decisions are often sent to the various markets where central banks have interests. During quiet periods, the monopolistic market structures of central banks make them to push interest rates in their interbank markets effectively without any player’s attention. Such environments often provide hard processes when considering liquidity options for the banks in operation. Further, the processes of providing liquidity seldom have any information about the policy measures that are set within the system, but only that which is put in the interest rates. Moreover, during times that are depicted as normal, the central bank often gives the banking system reserves that are appropriate to run their operations while making distributions in other financial institutions through the interbank market system.

The monetary provision is then delegated easily to other financial channels in other markets that are incorporated in the economy. Long term interest rates are often affected together with other credit market situations, and these are often important facets when dealing with investment capabilities in the economy. After such transmissions, the central bank often embarks on their normal duties of ensuring growth and many other objectives that are relevant to their operations. Issues of inflation and developmental growth in nations are vital and similarly tackled by the central bank without being sidelined.
When a crisis is imminent in an economy, the use of monetary policies is usually hard because of their complexity. This is because their transmission capabilities can easily be affected by various market disruptions that are often unavoidable. The volatility nature of demand for the available reserves and the low distribution nature of liquidity can adversely affect the central bank’s capability to ensure control of the short-term interest rates that are found in the interbank market. There can also be other disruptions that can occur in other financial markets, and this can also affect the transmission of monetary provisions or energy to other financial segments of the government and nation as a whole.
The paper is strong in nature and provides crucial information that pertains to the transmission of monetary capabilities to the market and other financial institutions through the use of the central bank. It strength also emerges from its approach on matters of monetary policy as it endeavors to uncover various monetary policy measures, and their effectiveness while being made use of by the federal government and the European central bank. The measures provided have dual operations which are through the portfolio-balance channel and the signaling channel. In the latter, the central bank can be able to make use of different communication capabilities to raise interest rates and bring back the needed confidence to the financial markets. The former works on the premise of the substitutability of assets which are not perfect in the market, through the overall acquisition of liquidity from the central bank, which leads to improved conditions of funding and lower yields.
The results from the findings and literature confirm that provided monetary measures that were unconventional were very effective, and their impact to the economy was relatively sizeable. However, there are areas of weaknesses as there were uncertainties on the part of quantifying the various effects which were mentioned in the publication. There is therefore a need to make changes to the effects and ensure those that can only be quantified to be operational.
The writers make use of secondary data which they have gathered from various financial institutions, which include the central bank. They also have information from the different markets where the effects of such policies are felt making it easy for other player to understand its provisions. The publication provides different organizations that make use of the measures provided by the unconventional monetary system, to bring to light their overall importance in the government when dealing with different financial matters.
In conclusion, the paper on unconventional monetary policy is vital for nation building and many other decisions that can be employed by institutions while desiring a change in their actions. The monopolistic nature of the central government will make learners and users of this information to understand why there have been high interest rates that have not been challenged by other organizations that are partisan to nation building, and many other aspects of the European economics.