00000nam 2200000zi 4500 9.902838 CaOODSP 20221107180054 m o d f cr |n||||||||| 210825t20212021oncd ob f|0| 0 eng d CaOODSP eng rda CaOODSP n-cn--- FB3-5/2021-21E-PDF Schroth, Josef, author. Optimal monetary and macroprudential policies / by Josef Schroth. Ottawa, Ontario, Canada : Bank of Canada = Banque du Canada, 2021. ©2021 1 online resource (ii, 41 pages) : charts. text txt rdacontent computer c rdamedia online resource cr rdacarrier Staff working paper = Document de travail du personnel, 1701-9397 ; 2021-21 "Last updated: May 7, 2021." Includes bibliographical references (pages 38-41). "This paper studies monetary policy in an economy where banks make risky loans to firms and provide liquidity services in the form of deposits to households. For given bank equity, market discipline implies that banks can take more deposits when assets are safer or more profitable. Banks respond to loan losses by making their balance sheets safer—i.e., they reduce risky lending sharply and accumulate more safe bonds. In contrast, a social planner would respond by making banks temporarily more profitable such that a riskier balance sheet can be maintained. A planner would temporarily reduce the expansiveness of monetary policy to avoid bonds becoming too liquid in support of the liquidity premium banks earn via deposits. Specifically, when bank equity is low, then optimal monetary policy stabilizes output by supporting bank lending rather than employment"--Abstract, page ii. Monetary policy. Bank loans. Politique monétaire. Prêts bancaires. Bank of Canada, issuing body. Staff working paper (Bank of Canada) 2021-21. (CaOODSP)9.806221 PDF 459 KB https://publications.gc.ca/collections/collection_2021/banque-bank-canada/FB3-5-2021-21-eng.pdf