Credit Risk Management: Rationing vs Credit Derivatives and Consequences for Financial Stability

Stefania Vanacore

Chapter 5 in Advances in Monetary Policy and Macroeconomics, 2007, pp 66-91 from Palgrave Macmillan

Abstract: Abstract The great expansion of financial markets in recent decades, on both the demand and the supply sides, has stimulated debate concerning whether or not monetary policies have to take into account the volatility of market asset prices. To date, the prevalent position is that central banks do not have to react to asset price volatility, in particular the reliable negative answer of Bernanke and Gertler (1999). Indeed, Bernanke and Gertler show that: ‘The inflation-targeting approach […] implies that policy should not respond to changes in asset prices, except insofar as the signal changes in expected inflation.’

Keywords: Monetary Policy; Credit Risk; Banking Sector; Credit Default Swap; Credit Market (search for similar items in EconPapers)
Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-80076-2_5

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DOI: 10.1057/9780230800762_5

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