Stephen Cecchetti, Tommaso Mancini-Griffoli and Machiko Narita
Does Prolonged Monetary Policy Easing Increase Financial Vulnerability?
IMF, 2017
What's inside?
Have financial institutions taken on too much risk in response to the availability of easy money?
Recommendation
The Federal Reserve found itself between a rock and a hard place following the 2008 financial crisis. The central bank’s unusual actions and extraordinary monetary policy accommodation no doubt helped prevent a greater economic calamity, but there is some question about whether the Fed may have also unwittingly stoked financial institutions’ risk-taking tendencies. Economists Stephen Cecchetti, Tommaso Mancini-Griffoli and Machiko Narita’s overview of whether financial institutions have taken on excessive debt in response to the availability of easy money sheds some much-needed light on this important issue, although their report does not come up with any definitive conclusions about the impacts of heightened risk-taking. getAbstract suggests this succinct, topical report to policy experts, economists and financial services professionals.
Summary
About the Authors
Stephen Cecchetti is a professor at Brandeis International Business School. Tommaso Mancini-Griffoli and Machiko Narita are IMF economists.
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