Central banks and different policies implemented in response to the recent Financial Crisis

Marianne Ojo

MPRA Paper from University Library of Munich, Germany

Abstract: Rescue cases involving guarantees (contrasted with restructuring cases) during the recent Financial Crisis, have illustrated the prominent position which the goal of promoting financial stability has assumed over that of the prevention or limitation of possible distortions of competition which may arise when granting State aid. The recent Financial Crisis has also illustrated how the traditional role of central banks has been extended to incorporate more innovative roles. The reduction of interest rates by central banks to all time lows – along with other unprecedented actions which have been undertaken by central banks, as evidenced by the recent Financial Crisis, have been regarded as „extensions of traditional methods of operation which have resulted in a new territory in which tools have been implemented in very new ways.“ As well as providing an analysis of how the traditional role of central banks has evolved through the duration of the Financial Crisis, this paper attempts to highlight how far central banks and governments should intervene and how far distortions of competition should be permitted during periods of financial crises.

Keywords: competition; central banks; recapitalisation; stability; regulation; financial crises; fundamentally sound financial institutions; macro prudential; Basel III; systemic risk; supervision; liquidity; state aid; monetary policy (search for similar items in EconPapers)
JEL-codes: E02 E58 G01 K2 (search for similar items in EconPapers)
Date: 2010-11
New Economics Papers: this item is included in nep-cba, nep-law, nep-mon and nep-reg
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https://mpra.ub.uni-muenchen.de/70898/1/MPRA_paper_26605.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:26605

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