BEA321 Banking and Financial Institutions Assignment
This report is examining the regulatory arrangements for the banks and various purposes which forces central bank to intervening in banks’ management, it will explain briefly Basel II supervisions arrangements, why banks endeavor to dodge regulatory constraint and the view of whether to change banks regulations in the future.
In this paper, we empirically examine the portfolio-rebalancing effects stemming from the policy of “quantitative monetary easing” recently undertaken by the Bank of Japan when the nominal short-term interest rate was virtually at zero. Portfolio rebalancing effects resulting from the open market purchase of long-term government bonds under this policy have been statistically significant. Our results also show that the portfolio-rebalancing effects were beneficial in that they reduced risk premiums on assets with counter-cyclical returns, such as government and high-grade corporate bonds
Keywords: Quantitative Easing; Monetary Policy; Fiscal inflation; Macroeconomic
Stabilization; Interest Rates; Central Bank Operations
The term Quantitative easing QE is an economically word that describes form of monetary policy used by central banks to increase money supply in an economy when the bank interest rate, discount rate and or interbank interest rate are either at or close to zero. Because central bank does this by first crediting its own account with money it has created out of nothing. It then purchases financial assets, including government bonds and corporate bonds, from banks and other financial institution in a process referred to as open market operation. Simply "Quantitative" refers to the fact that a specific quantity of money is being created; "easing" refers to reducing the pressure on banks.
How ‘quantitative easing’ differs from the normal operation of monetary policy,
Quantitative easing differs from the normal operation of monetary policy. The...