THE IMPACT OF THE GLOBAL BANKING CRISIS ON CENTRAL BANKING (Wplyw globalnego kryzysu bankowego na bankowosc centralna)

• Authors: Slawinski Andrzej
• Languages of publication: PL

Abstracts

EN

The scale of the recent global banking crisis was for central banks unexpected, because banks took losses in the new fields of their activities that were not effectively supervised. Additionally, banks themselves were not aware of the scale of their potential losses as they did not create effective information systems measuring their risks. The severity of the global recession resulted mainly from the large scale of the banking crisis. This illustrated that financial system did not have such neutral impact on the economy, as was assumed in the DSGE models. It will be difficult to include financial sectors into the general equilibrium models as the functioning of financial systems is characterized by short-time horizons, important role of the behavioral factors and non-linear dynamic properties. After the experiences of the recent crisis, central banks will use interest rates policy not only to stabilize inflation, but also to tame unstable lending booms. However, the experiences of the recent crisis show that rising interest rates might not be sufficient to prevent boom-bust cycles. Thus, there is necessity to change banking supervision that should shield not only the stability of banks but also to hedge the economy against boom-bust cycles. This opens the new filed for coordination between monetary policy and banking supervision which wait to be covered by macroeconomic research. Central banks will be interested also in tightening supervision over the inter-bank markets for commodity forward contracts, because speculation on the these markets was an important factor behind the global sharp rise in food, oil, gas and metal prices that induced central banks to raise interest rates despite the approaching recession.

Keywords

EN

DSGE MODELS; FINANCIAL SUPERVISION; GLOBAL BANKING CRISIS; SPECULATION ON FORWARD COMMODITY MARKETS.

Discipline

• ECONOMICS: ECONOMICS

• Publisher: Komitet Nauk Ekonomicznych PAN, Polskie Towarzystwo Ekonomiczne
• Journal: Ekonomista
• Year: 2010
• Issue: 2
• Pages: 145-162
• Document type: ARTICLE

Contributors

author

Slawinski Andrzej

• Andrzej Slawinski, Szkola Glówna Handlowa w Warszawie, Katedra Skarbowosci, al. Niepodleglosci 162, 02-554 Warszawa, Poland

Identifiers

CEJSH db identifier

10PLAAAA086322