Capitolo 9

1. Capitolo 9 L’Offerta di Moneta e la Politica Monetaria

2. Fig. 9.01 Instruments, Targets, andObjectives in Monetary Policy Figure 9.1

3. Fig. 9.01 • Targets • Long-term market interest rates • Monetary aggregates (M1, M2, M3…) • Exchange rates • Inflation rates • Objectives • Price stability (primary objective) • Short-term growth (secondary) • Exchange rate stability (secondary) • Instruments • Bank refinancing rates (repo and discount rates) • Monetary base control using open market purchases and sales • Required reserve ratios Figure 9.1

4. Fig. 9.02 Monetary policy procedures Figure 9.2

5. Fig. 9.02 Monetary policy procedures Quantity of nominal money is now endogenous. Interest rate is now endogenous Interest rate Interest rate Nominal money Nominal money (a) Money targeting (b) Interest rate targeting Figure 9.2

6. Table 9.01 Consolidated balance sheet of the Eurosystem30 April 2004(€ billions) Table 9.1

7. Fig. 9.03 Central Bank Assets Liabilities Consolidated Governmentand Nonbank Private Sector Reserves of commercial banks Foreign assets Assets Liabilities Loans to comm. banks Government and private debt Bank notes held by nonbanks Bank notes held by nonbanks Claims on governments Deposits of private sector Deposits of government Where’sM0? Net worth Commercial Banks Assets Liabilities Vault cash and reserves at Central Bank Deposits of government Liabilities to Central Bank Deposits of private sector Real assets, incl. net worth of banking sector Loans and securities Net worth Net worth Figure 9.3

8. Fig. 9.04 Reserves change in reserves Deposits change in deposits Reserves-money stock link Figure 9.4

9. Base monetaria = M0 = CU + R • CU = ccM1 e R = rrD • Moneta = M1 = CU + D = ccM1 + D  • D = (1-cc)M1 che sostituito in M0  • M0 = [cc + rr(1-cc)]M1  • M1/M0 = 1/ [cc + rr(1-cc)] = mm • dmm/drr = -(1-cc)/([cc + rr(1-cc)])2<0 • dmm/dcc = -(1-rr)/([cc + rr(1-cc)])2<0

10. Table 9.02 M0, M2, money market multipliers, and currency 2003 Table 9.2

11. Table 9.03 Theoretical values of the money multiplier (M1/M0) Reserve ratio = rr Currency/M1 5% 10% 20% 0% 20.0 10.0 5.0 5% 10.3 6.9 4.2 10% 6.9 5.3 3.6 20% 4.2 3.6 2.8 30% 3.0 2.7 2.3 Table 9.3

12. Fig. 9.06 The money market Figure 9.6

13. Fig. 9.06 Ceteris paribus 0 Derived demand for monetary base Interest rate Nominal money Figure 9.6

14. Fig. 9.06 A 0 The supply of the monetary base controlled by the central bank Interest rate Nominal money Figure 9.6

15. Fig. 9.06 B A 0 If the central bank does not respond to an increase in the demand for monetary base... Interest rate Nominal money Figure 9.6

16. Fig. 9.06 A C 0 If the central bank instead wishes to hold interest rates constant... Interest rate Nominal money Figure 9.6

17. Fig. 9.06 A 0 Actually the central bank can choose any point along the new demand for monetary base B C Interest rate Nominal money Figure 9.6

18. Fig. 9.07 ECB interest rates Figure 9.7

19. Fig. 9.08 The Bank of England’s Inflation Forecast:The Fan, 2004-06 (Percentage increase in prices on a year earlier) Figure 9.8

20. Fig. 9.09 Foreign exchange market interventionand sterilization Figure 9.9

21. Table 9.04 Seigniorage around the world Seigniorage Inflation 1980­91 1992-95 1980­91 1992-95 Advanced Economies 0.8 0.3 7.2 3.3 US 0.4 0.4 5.4 2.8 Germany 0.5 0.3 2.9 3.5 Japan 0.6 0.3 2.6 0.9 Hungary 0.4 4.1 12.7 23.1 Poland 7.0 2.2 99.5 34.6 Israel 1.9 0.5 111.1 11.3 Africa 1.4 1.3 19.6 22.2 Asia 1.5 2.0 7.6 7.1 Latin America 3.2 2.4 251.4 110.1 Source: Masson, Savastano and Sahrma (1998) Table 9.4

22. Table 9.05 Deposit insurance in Europe 2004 Table 9.5

23. Fig. 9.10 Reserve and capital adequacy ratios Typical Commercial Bank, SA Assets Liabilities (1) Central bank reserves Deposits Net worth (2) Loans and securities Tier 1 (primary) capital Tier 2 (secondary) capital Figure 9.10