A tale of two central banks: how the Federal Reserve and bank of England responded to the financial crisis of 2007

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dc.contributor.author Ahmad, Saad
dc.date.accessioned 2010-12-17T17:31:10Z
dc.date.available 2010-12-17T17:31:10Z
dc.date.issued 2010-12-17
dc.identifier.uri http://hdl.handle.net/2097/7027
dc.description.abstract The financial crisis that began in the summer of 2007 has greatly tested the abilities of central banks to counter financial instability and economic slowdown through traditional monetary policy. This paper will examine in detail the monetary response of both the Federal Reserve Bank of the United States (Fed) and the Bank of England to the turmoil in the financial markets. The Bank of England, which adopted inflation targeting after the Black Wednesday crisis in 1992, and the Fed, which has no such stated policy, allows us to compare two different monetary regimes in the aftermath of a crisis. To counter the financial crisis the Bank of England resorted to unconventional monetary policies that included expansion of liquidity easing operations and a policy of quantitative easing through purchase of debt securities. The Fed also made use of both traditional tools as well as more innovative measures to combat liquidity concerns in the financial market. A multitude of new programs was initiated by the Fed to supply liquidity to susceptible lending institutions and lower the spreads on commercial loans and securities. Overall, we find that the actions of the Bank of England and the Fed were effective in restoring stability to financial markets and preventing a prolonged economic depression. Further, the Bank of England's inflation targeting framework did not hinder its ability to respond to the crisis and there was no major divergence in the policy actions of the two central banks. en_US
dc.language.iso en_US en_US
dc.publisher Kansas State University en
dc.subject Federal Reserve en_US
dc.subject Bank of England en_US
dc.subject Financial crisis en_US
dc.subject Inflation targeting en_US
dc.title A tale of two central banks: how the Federal Reserve and bank of England responded to the financial crisis of 2007 en_US
dc.type Report en_US
dc.description.degree Master of Arts en_US
dc.description.level Masters en_US
dc.description.department Department of Economics en_US
dc.description.advisor William F. Blankenau en_US
dc.subject.umi Economics, Commerce - Business (0505) en_US
dc.subject.umi Economics, Finance (0508) en_US
dc.subject.umi Economics, General (0501) en_US
dc.date.published 2010 en_US
dc.date.graduationmonth December en_US

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