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Rue de la Banque No 17: Monetary policy without interest rates. The French experience with quantitative controls (1948 to 1973)

The global crisis has fostered a debate about the use of quantitative instruments by central banks. This issue of Rue de la Banque looks at French monetary policy, during the period known as the Trente Glorieuses,when the central bank relied on quantitative instruments rather than on interest rates. The specific effect of quantitative controls on money and credit has to be taken into account in order to identify correctly the stance of monetary policy. Using a narrative approach to assess the monetary policy stance suggests that quantitative instruments can have substantial effects. This experience shows that one major issue for unconventional policies based on quantitative controls is how to keep monetary policy effective without making central bank instruments and announcements excessively complex.

This letter presents the findings of research carried out at the Banque de France. The views expressed in this post are those of the authors and do not necessarily reflect the position of the Banque de France. Any errors or omissions are the responsibility of the authors.

 

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Focus n°15

Focus n°15

Market liquidity: myth and reality

Current changes in the functioning of bond markets are leading to the perception of a structural and general deterioration in their liquidity, which could pose risks to the stability of the financial system. This Focus shows that, in fact, the situation is much more nuanced and the deterioration is not necessarily where we believe it to be. Traditional indicators, for sovereign debt for example, appear to contradict the perception of market players. The deterioration in liquidity only affects certain market segments, and has a greater impact on its volatility and average level than on its price. It is also driven by cyclical and structural factors whose impact on the soundness of the financial system needs to be assessed over the medium term. Nevertheless, the current transition period could result in a more effective organisation of bond markets, a provision of liquidity services that is more resilient to shocks and whose price better reflects the reality of the risks incurred and, lastly, better management by investors of the risk of a liquidity dry-up. Actions by public authorities and market players could play a useful role in making this favourable scenario become a reality.

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Speeches by the Bank's Authorities

 

François Villeroy de Galhau, Governor of the Banque de France

Biography of Francois Villeroy de Galhau

Speech by François Villeroy de Galhau, Governor of the Banque de France
25th Parliamentary Conference on Savings – 2 February 2016

Speech by François Villeroy de Galhau, Governor of the Banque de France
Annual Exchange Conference: Innovation and Change - 19 January 2016
- Presentation

Speech by François Villeroy de Galhau, Governor of the Banque de France
New Year Adress - 18 January 2016

Speech by François Villeroy de Galhau, Governor of the Banque de France
Banque de France conference “Card payments in Europe: Latest trends and challenges” - 18 January 2016

Welcome Address, François Villeroy de Galhau, Governor of the Banque de France
Farewell Symposium for Christian Noyer, Banque de France & Bank for International Settlements - 12 January 2016

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2016/02/05
CAD 1.54040
USD 1.12020
JPY 130.71000
GBP 0.76975
CNY 7.36240
CHF 1.11010

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