Economic studies

Role Of Central Banks After The 2008 Financial Crisis : Price Stability And Financial Stability

Authors : Mohammed Amin Beneddine . Tahar Latrech .

Table of Contents

Abstract

With the rise of inflation in the 1960s and 1970s, economists, and also the public andpoliticians, began to discuss the high costs of inflation. according to that,almost all nations in the world are in a low inflation environment. Of 223countries, 193 currently have annual inflation rates less than or equal to 10 percent,while 149 have annual inflation rates less than or equal to 5 percent. The recent crisis showed that price stability does not guarantee macroeconomic stability. In several countries, dangerous financial imbalances developed under low inflation and small output gaps.To ensure macroeconomic stability, policy has to include financial stability as an additional objective. But a new objective demands new tools : macroprudential tools that can target specific sources of financial imbalances (something monetary policy is not well suited to do). Effective macroprudential policies (which include a range of constraints on leverage and the composition of balance sheets). This will make a serious challenges against central banks in both idustrialized and emerging economies

Keywords

pricestability, inflation targeting, financial stability, monetary policy, macro-prudential policy

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SAKHRI Mohamed

I hold a bachelor's degree in political science and international relations as well as a Master's degree in international security studies, alongside a passion for web development. During my studies, I gained a strong understanding of key political concepts, theories in international relations, security and strategic studies, as well as the tools and research methods used in these fields.

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