Mechanism of Interest Rates and the Crisis

Rumen Georgiev ()
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Rumen Georgiev: Faculty of Economics and Business Administration, Sofia University St Kliment Ohridski

Yearbook of the Faculty of Economics and Business Administration, Sofia University, 2012, vol. 10, issue 1, 55-73

Abstract: The processes of formation of interest rates in the country in the conditions of economic crisis and the influence of currency board on it is studied. The approach is a systematic one and is based on the conceptions of the game theory and their strategic interaction. Is shown and analyzed an information of official banking statistics and legal documents. The basic postulate is that by now the mechanism of interest rates is a reason for a number of risks influencing the economic security of the country and the organizations. It is proved why in the present conditions it is impossible by push of state bodies, BNB and street protest to influence considerably the decrease of interest rates. A necessity of a step by step increase of the role of BNB as a „player“ on the currency market is argumented namely by more active currency consequently interest rates policy before joining the eurozone. Conceptions for elaborating a necessary for this conception are presented.

Keywords: interest rate; currency policy; central bank; game theory; currency board; basic (discount) rate; value of the currency resources; loans at risk; deposit war; Law on consumer loans; Treaty of Lisbon; ECB; eurozone. (search for similar items in EconPapers)
JEL-codes: D81 (search for similar items in EconPapers)
Date: 2012
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