The Impact of the Global Financial Crisis on Central Banking

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review


This chapter describes the impacts of the global financial crisis on monetary policy and institutions. It argues that during the crisis, financial stability took precedence over traditional inflation targeting and discusses the emergence of unconventional policy instruments such as quantitative easing (QE), forex market interventions, negative interest rates, and forward guidance. It describes the interaction between the zero lower bound (ZLB) and QE, and proposals, such as raising the inflation target, to alleviate the ZLB constraint. The chapter discusses the consequences of the relative passivity of fiscal policies, “helicopter money,” and 100 percent reserve requirement. The crisis triggered regulatory reforms in which central banks’ objectives were expanded to encompass macroprudential regulation. The chapter evaluates recent regulatory reforms in the United States, the euro area, and the United Kingdom. It presents data on new net credit formation during the crisis and discusses implications for exit policies.
Original languageEnglish
Title of host publicationThe Oxford Handbook of the Economics of Central Banking
EditorsDavid G. Mayes, Pierre L. Siklos, Jan-Egbert Sturm
Place of PublicationNew York
PublisherOxford University Press
ISBN (Electronic)9780190626204, 9780190626211
ISBN (Print)9780190626198
StatePublished - 2019


  • unconventional instruments
  • exit strategies
  • evolution of credit
  • regulatory reform
  • zero lower bound


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