Monetary Policy 101
Nathan Tankus created this series to introduce people outside of the inner financial circles of professionals, journalists and policymakers to the basic mechanisms and dynamics of monetary policy.
Part 1 is devoted to the basic functioning and purposes of the purchase and sale policies Central Banks undertake:
Part 2 explains what colleteral is and the workings of the repo market.
Part 3 is an introduction to the accounting or balance sheet perspective on the macroeconomy
Comment from our editors:
At school and in undergraduate economics, people are taught that monetary policy is all about setting the main interest rate controlling an economy's lending and borrowing. Yet as a matter of fact, central banks do much more than that - and ever since the Great Financial Crisis in 2008/09, interest rate setting has been being outshone by activities of central banks on bond markets (cue Quantitative Easing and other, related concepts).
The series at hand emphasises this element of monetary policy almost certain to continue playing a dominant role in the years ahead.
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