Market functioning and central bank policy

Bank for International Settlements

No 12 in BIS Papers from Bank for International Settlements

Abstract: The papers in this volume were presented and discussed at the Autumn Central Bank Economists' Meeting held at the BIS on 15-16 October 2001. The meeting focused on recent changes in market functioning and their impact on central bank policy. A number of structural developments seem to have had a significant influence on the functioning of financial markets. The most important of these developments are the introduction of the euro, the spread of electronic trading, changes in the constellation and behaviour of market participants and falling supplies of government debt. There is some evidence that such structural changes resulted in shifts in liquidity among different market segments and, moreover, that liquidity is less robust than in the past. The process of price formation and the information conveyed by prices also appears to have been affected. This poses various challenges for central bank policy, including how best to gauge market expectations and conduct monetary policy operations.

Date: 2002 Written 2002-08
ISBN: 92-9131-636-9
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Chapters in this book:

Changes in market functioning and central bank policy: an overview of the issues , pp 1-24

Marvin Barth, Eli Remolona and Philip Wooldridge

Implications of declining government debt for financial markets and monetary operations in Australia , pp 25-42

Malcolm Edey and Luci Ellis

The influence of structural changes on market functioning and its implications for monetary policy: a focus on the euro area , pp 43-64

Laurent Clerc, Françoise Drumetz and François Haas

Euro area government securities markets: recent developments and implications for market functioning , pp 65-85

Roberto Blanco

The effects of bank consolidation on risk capital allocation and market liquidity , pp 86-109

Chris D'Souza and Alexandra Lai

How resilient are financial markets to stress? Bund futures and bonds during the 1998 turbulence , pp 110-123

Christian Upper and Thomas Werner

Electronic trading in Hong Kong and its impact on market functioning , pp 124-137

Guorong Jiang, Nancy Tang and Eve Law

Foreign exchange markets in the 1990s: intraday market volatility and the growth of electronic trading , pp 138-147

Alain Chaboud and Steven Weinberg

Positive feedback trading under stress: evidence from the US Treasury securities market , pp 148-180

Benjamin Cohen and Hyun Song Shin

The determinants of credit spread changes in the euro area , pp 181-199

Michael Boss and Martin Scheicher

Measuring capital market integration , pp 200-221

Marina Emiris

Interactions between cash and derivatives bond markets: some evidence for the euro area , pp 222-267

Wolfgang Schulte and Roberto Violi

Monetary policy signalling and movements in the Swedish term structure of interest rates , pp 268-297

Malin Andersson, Hans Dillén and Peter Sellin

The information content of the yield curve , pp 298-328

Hans-Jürg Büttler

What central banks can learn about default risk from credit markets , pp 329-339

Ian Marsh

The changing information content of market interest rates , pp 340-357

Vincent Reinhart and Brian Sack

Inflation targeting in Brazil: shocks, backward-looking prices and IMF conditionality , pp 358-384

Joel Bogdanski, Paulo Springer de Freitas, Ilan Goldfajn and Alexandre Tombini

Market liquidity and the role of public policy , pp 385-401

Arnaud Marès

The monetary policy decisions of the ECB and the money market , pp 402-411

Vítor Gaspar, Gabriel Perez-Quirós and Jorge Sicilia

Recent changes in fixed income markets and their impact on reserve management by the Netherlands Bank , pp 412-426

Ad Visser

Bank of England open market operations: the introduction of a deposit facility for counterparties , pp 427-432

William Allen

The monetary transmission mechanism in the United States: some answers and further questions , pp 433-443

Kenneth Kuttner and Patricia Mosser

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