NAPCP European Commercial Card and Payment Conference on 23 June Serves European Market for Fourth Year

Seroquel canada NAPCP Now in its fourth year, the NAPCP European Commercial Card and Payment Conference has become an important event for Commercial Card and Payment industry professionals in Europe and beyond. This event, which is supported by Lead Sponsor Visa and Conference Sponsors Barclaycard, Fraedom and HSBC, is…

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Monetary policy: Goodhart’s new law

CHARLES Goodhart gave a talk in London on May 10th, at a lunch organised by Sushil Wadhwani, the economist and fund manager. Mr Goodhart, best known for his law that economic measures tend to misbehave once targeted, was tackling the issue of why repeated monetary stimulus by central banks had failed to stimulate credit creation.If we go all the way back to Ben Bernanke’s “helicopter money” speech, Mr Goodhart said economists accept the argument that:Inflation is a monetary phenomenon. Central banks can create money. Therefore central banks can create inflation.Sure enough, central banks have expanded their balance sheets massively since 2008. But the effect on inflation has been non-existent (and the effect on economic growth is still in dispute). The problem is that base money (currency plus commercial bank reserves) at the central bank has lost its relationship with broad money (credit in the wider economy). The banks were not lending out the newly-created money.In part this was because, in the wake of the 2008 crisis, regulators demanded that banks improve their capital ratios. This had made banks much more cautious about extending new loans to risky borrowers; they have tended to focus on large corporations and on their home markets, the latter approach tacitly approved by central banks (according to Mr Goodhart). Meanwhile, holding reserves at the central …

Monetary policy: Goodhart’s new law

CHARLES Goodhart gave a talk in London on May 10th, at a lunch organised by Sushil Wadhwani, the economist and fund manager. Mr Goodhart, best known for his law that economic measures tend to misbehave once targeted, was tackling the issue of why repeated monetary stimulus by central banks had failed to stimulate credit creation.If we go all the way back to Ben Bernanke’s “helicopter money” speech, Mr Goodhart said economists accept the argument that:Inflation is a monetary phenomenon. Central banks can create money. Therefore central banks can create inflation.Sure enough, central banks have expanded their balance sheets massively since 2008. But the effect on inflation has been non-existent (and the effect on economic growth is still in dispute). The problem is that base money (currency plus commercial bank reserves) at the central bank has lost its relationship with broad money (credit in the wider economy). The banks were not lending out the newly-created money.In part this was because, in the wake of the 2008 crisis, regulators demanded that banks improve their capital ratios. This had made banks much more cautious about extending new loans to risky borrowers; they have tended to focus on large corporations and on their home markets, the latter approach tacitly approved by central banks (according to Mr Goodhart). Meanwhile, holding reserves at the central …