25 years: Economic commentary & banking
In this second part of Frances's video on central banks, she covers some of the history that shaped the role they hold today, including the Great Moderation and the financial crisis.
In this second part of Frances's video on central banks, she covers some of the history that shaped the role they hold today, including the Great Moderation and the financial crisis.
12 mins 40 secs
The financial crisis caused a dramatic shift in monetary policy. Prior to the financial crisis, central banks used interest rate policy to control inflation. Since then, more unconventional forms, such as QE have had a huge impact on the global economy. However, central banks are now demanding an entire change of emphasis, suggesting that governments should share responsibility in restoring the economy.
Key learning objectives:
Identify the monetary policy utilised pre and post-crisis
Define the Great Moderation
Identify what the central bank should do next