Unconventional Monetary Policies: A Stock-Taking Exercise

Abstract

This paper takes stock of literature on unconventional monetary policies, from their implementation to their effects on economy. In particular, we discuss in detail two main measures implemented in most developed economies, namely forward guidance and large-scale asset purchases. Overall, there is near consensus that these measures have been useful, although there are a few dissenting views. Because unconventional monetary policies have left their mark on economies and on balance sheets of central banks, we offer insights into their legacy and ask whether they have led to a change in the rules of game for setting interest rates and choosing size and composition of central banks’ balance sheets. Finally, we discuss whether to modify objectives and instruments of monetary policy in future, in comparison with pre-crisis situation.