Since March 1998 the Central Bank of Iceland’s main instrument has been the interest rate on its repos with credit institutions. Until spring 2001 the Bank used this rate to maintain the exchange rate of the króna within its deviation band. After moving on to an inflation target that spring, the Bank has applied its policy rate towards maintaining the target. Changes in the Central Bank policy ...

following changes in economic fields, monetary transmission mechanism has been equipped with different approaches. for example, introducing and then applying the first draft of basel committee’s capital requirement has portrayed new horizon in the monetary transmission mechanism discussions. while as the first step, it has been emphasized on the static role of bank’s capital; as the second step...

I test for the existence of a bank lending channel of monetary policy transmission. I identify bank lending channel effects with a simple model of bank behavior incorporating longterm customer relationships. The model suggests that when a large fraction of bank assets is held in loans, contractionary monetary policy shocks are more likely to cause a cutback in bank lending, in turn reducing rea...

In May 2000, the Treasurer/Minister of Finance invited me to review the operation of monetary policy in New Zealand and provided me with the Terms of Reference. In undertaking the review, I have read the wide range of submissions provided to me and have met with a number of submitters and other interested parties. I visited New Zealand for two weeks in November 2000 in order to observe the oper...