Slides

The monetary
policy landscape
in a financial crisis
Governor Stefan Ingves
Images from the speech at Swedish Economic
Association,
31 March 2009
Image 2: Current account deficit as
percentage of GDP
12
12
Kina
10
10
Sverige
8
8
USA
6
6
4
4
2
2
0
0
-2
-2
-4
-4
-6
-6
-8
-8
-10
-10
95
98
01
04
07
Källa: IMF
Image 3: Credit spreads* for
corporate bonds in the USA
Basis points
2200
2000
1800
Aaa
Baa
High-yield
1600
1400
1200
1000
800
600
400
200
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
*The difference between the yield on corporate bonds and the yield on treasury bonds. Source: Reuters Ecowin
Image 4: Monetary policy and financial
stability are interlinked
i
lending
t
 it  mct ,...
Image 5: Unconventional monetary policy
A stylised balance sheet for a central bank
Assets
Liabilities
Foreign assets
Banknotes and coins
Domestic assets
Bank deposits
Lending
Equity
Image 6: Central banks’ balance sheets
Percentage of GDP
25
25
ECB
BOE
20
20
Federal Reserve
Riksbanken
15
15
10
10
5
5
0
jan-07
0
apr-07
jul-07
okt-07
jan-08
apr-08
jul-08
okt-08
jan-09
Sources: Bureau of Economic Analysis, Eurostat, Office for National Statistics, SCB and the respective central banks
Image 7a: The Riksbank’s balance sheet
30 June 2008 (before Lehman Brothers)
Assets
Gold
Currency reserve
Liabilities
26 Banknotes &
coins
108
158 Fine tuning
0
0 Riksbank
certificates
0
Lending SEK
4 Debt to Fed
0
Other
4 Equity
59
Other
25
Lending USD
TOTAL
192 TOTAL
192
Image 7b: The Riksbank’s balance sheet
31 December 2008 (after Lehman Brothers)
Assets
Gold
Liabilities
30 Banknotes &
coins
112
Currency reserve
200 Fine tuning
207
Lending USD
196 Riksbank
certifikates
49
262 Debt to Fed
189
Lending SEK
Other
TOTAL
7 Equity
59
Other
84
700 TOTAL
700
Image 8: Quantity equation
M V  P  Y
Image 9: Taylor rule for monetary policy

 
it   t  r    t    Y Yt  Y
*
t
*

Image 10: A ”Taylor rule” for capital
adequacy



ct  c   L Lt  L   Y Yt  Y
*

Image 11
i
lending
t
 it  mct ,...

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