Marius Jurgilas Home Page

 Office address:
Bank of England
Threadneedle Street, London
EC2R 8AH

Completed papers:

• Liquidity-saving mechanisms in collateral-based RTGS payment systems
   

• Collateral pool settlement system
   

• Monetary Policy Under a Currency Board
   

• Interbank Markets Under Currency Boards
   

• Financial Dollarization: The Role of Banks and Interest Rates
   

• Corruption and Growth Under Weak Identification
   

• Interbank Market Under the Currency Board: Case of Lithuania

Monetary policy under a currency board

Abstract

The consensus view is that central banks under currency boards do not have tools for active monetary policy. In this paper we analyze the foreign exchange fee as a monetary policy instrument that can be used by a central bank under a currency board. We develop a general equilibrium model showing that changes in this fee may have the same effects as a change in the monetary policy stance. Thus, central banks operating under the currency board are shown to have an avenue to implement active monetary policy.

-- Vini design, 2006 --
15-May-2010