Questions tagged [monetary-policy]
The monetary-policy tag has no usage guidance.
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Are amounts of less than a cent legally valid amounts in currencies like EUR or USD?
The following can be applied to any currency but let's consider EUR/USD for simplicity.
In the context of cryptocurrency exchanges, one can hold assets for the value of thousandths of a dollar or even ...
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How does QE reduce long-term interest rates? [closed]
It is said to be that, in a QE programme, the Fed reduces long-term interest rates by purchasing long-term securities. How does this work? Why does buying longer maturity securities from banks reduce ...
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Who is buying all the debt?
Please bear with my limited knowledge of monetary systems. I've got degrees in Comp Sci and Math, and i work as an ml engineer, so I'm pretty used to numbers. But, i simply can't wrap my mind around ...
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What determined the "cost of borrowing money" or the interest rate in a gold-based economy [closed]
In the modern economy, the central bank decides the cost of borrowing money using interest rates along with other several tools and technic. But I was wondering, in a gold-based economy (not the gold ...
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How much percent of the total Euro Zone Euros was artificially added through systems like QE this century? [closed]
Until 2018, the ECB 'printed' € 2,500,000,000,000 (2.5 trillion) through quantitative easing, and then it proceeded to add € 20,000,000,000 (20 billion) per month "for as long as necessary", which is ...
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Why do banks park their money at the european central bank instead of buying stocks?
Sorry for asking a very very similar question to [1], but I'm still confused why banks would not invest their money in stocks instead of parking it at the central bank and pay the negative interest of ...
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Are Fed repo operations done through the discount window?
Recently the Fed performed repo operations to keep the effective Fed funds rate down and close to its target. Is this the usual way banks get loans from the discount window, using treasuries as ...
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How has the Fed been reducing its balance sheet?
I understand the Fed has been letting its treasury securities mature without reinvesting in new ones, but does the Treasury actually pay the Fed the principal? That is, does the Treasury's reserve ...
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How can one maximize the value of their money when their country is adopting the Euro?
Countries joining the EU at some point decide to adopt the Euro as their own currency. How does this process unfold for the common citizen?
More importantly though, how can one maximize the value of ...
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Why are bank rates based on the federal interest rate?
From what I have read, the Federal Reserve sets the "key rate", which is the rate at which banks can borrow money from the Reserve. However, I don't understand why both mortgage lending rates and ...
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Why does the SNB consider the swiss franc overvalued? [closed]
The swiss franc became ~20% stronger in January 2015, when the swiss national bank removed the 1.20 cap. Ever since, the SNB has consistently been saying that the franc is overvalued, and has made ...
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How can I estimate future pension pot limit?
To ensure I don't overflow my pension in future, I require some way of best-guessing what the pension pot limit will be when I retire (it's currently £1.25M, soon to be £1M due to new policy).
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Why lower the deposit rate if it is already negative? [closed]
The ECB has been lowering the interest rate on its deposit facility, first to -0.1% in June 2014, then to -0.2% in September and eventually to -0.3% in December 2015.
But what difference does it make ...
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What exactly is the interest rate that the Fed is going to adjust?
Lately, the financial press talks non-stop about the Fed doing this and that to the interest rate. What exactly is this interest rate that the financial press is talking about?
Why is this Fed ...
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How can banks pay interest on money they borrow from the FED? [closed]
I'm not sure if this is the right site to ask this question. If it's not, please point me in the right direction.
So, if the FED is the only institution that can increase the monetary base (create ...
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On what dates do the U.S. and Canada release their respective federal budgets?
What is the date on which the U.S. officially announces its budget? What is the date for Canada? I want to know the dates because I would like to go back to historical charts and see if the stock ...
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As an investor or speculator, how might one respond to QE3 taper?
I see on the Internet a lot of talk amongst the financial types that QE3 may/may not taper off. I have owned some mutual funds as part of an IRA for the past year and took advantage of the huge ...
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What are good investments to use as hedges when the Federal Reserve draws down quantitative easing?
Basically I think it is quite obvious that quantitative easing (QE) will be pulled back eventually and countries will start to tighten their monetary policy. When that happens, what kind of assets ...
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Does the Fed keeping interest rates low stimulate investment in the stock market and other investments?
I heard that if the Fed keeps interest rates low then folks with money to invest will choose something other than just a money market or passive sort of investment, perhaps choosing investing in the ...
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What do people mean when they talk about the central bank providing "cheap money"? What are the implications for the stock market?
Newspapers write a lot about the central bank stopping "cheap money" in the US. What is that exactly and what are the implications for the stock market?
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Swiss-style Monetary Policy
I'm doing some research on investing and financial advisers. Not that I have a lot (no debt, less than 20K in net worth), but I've recently finished paying off all my student loans, and am now ...
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How can all these countries owe so much money? Why & where did they borrow it from?
When I look at this long list of countries with debt, I get the feeling we've all been sold a load of manure. How can so many countries owe so much money? Generally speaking, why did they borrow it, ...
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Why is seigniorage different for paper notes and coins?
Wikipedia defines Seigniorage for paper notes and metal coins. Why is seigniorage for paper money not just face value - production cost? I can understand using just the interest rate in the age of the ...
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If a country can just print money, is global debt between countries real? [closed]
I was having a conversation with my brother last night and we were trying to figure out how exactly countries go into debt to each other. Say the US borrows money from China. What does this mean? Do ...
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How much control over the Federal Reserve does the U.S. Government have? [closed]
Or, in other words: Who does the head of Fed report to? Is the Federal Reserve a private institution?
I'm going to be a bit naive here, have just read about how the Fed has been brought to life and ...
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The U.S. National Debt: What is it, where did it come from, and how does it work?
I am not from USA. I read few articles about the US National debt but still can't get the sense of it. Could you explain it in simple words? I know that it is huge. I can't understand following things:...
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Where do countries / national governments borrow money from? [closed]
It seems that every country on Earth is in debt, but nowhere on the news do they ever mention to who. If countries are all in debt to each other then why not just cancel all the countries debt.
If it'...
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Do banks keep their reserves at the Fed in cash or can they be kept in US Treasuries?
This chart at the St. Louis Fed has a lot of people worried about future inflation, because it represents idle money that, when lent out, could eventually flood the world with 10 - 12 trillion new ...
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Is inflation a good or bad thing? Why do governments want some inflation?
Is inflation a good or bad thing? Why do governments want some inflation?
user454
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How does the concept of negative interest rates work? Are there any examples of this?
This term has been proposed in economics, what exactly is it? I thought interest rates never fall below zero. How would this work? Wouldn't it actually be a penalty to depositor/investor or a bonus ...
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