Although interest-rate cuts and central-bank asset purchases were highly effective in resolving the 2008 financial crisis, they have proved utterly disappointing in the years since. At this stage, it should be clear that the sustained weakness of private-sector investment is not a problem central bankers can fix on their own.
SYDNEY – The Bank for International Settlements (BIS), the central bankers’ club in Basel, Switzerland, recently conducted an in-depth evaluation of the unconventional monetary policies that have become the norm in many countries since the 2008 financial crisis. It should come as no surprise that the resulting report, compiled by a committee of central bankers reviewing their own past performance, finds little to fault. That is fine; the financial system was saved, after all. But a more important question is whether, and to what extent, unconventional policies remain relevant in the post-crisis world.
SYDNEY – The Bank for International Settlements (BIS), the central bankers’ club in Basel, Switzerland, recently conducted an in-depth evaluation of the unconventional monetary policies that have become the norm in many countries since the 2008 financial crisis. It should come as no surprise that the resulting report, compiled by a committee of central bankers reviewing their own past performance, finds little to fault. That is fine; the financial system was saved, after all. But a more important question is whether, and to what extent, unconventional policies remain relevant in the post-crisis world.