The Origins and Development of Financial Markets and Institutions From the Seventeenth Century to the Present
Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- List of contributors
- Preface and acknowledgments
- 1 Financial innovations and crises: The view backwards from Northern Rock
- 2 An economic explanation of the early Bank of Amsterdam, debasement, bills of exchange and the emergence of the first central bank
- 3 With a view to hold: The emergence of institutional investors on the Amsterdam securities market during the seventeenth and eighteenth centuries
- 4 Was John Law's System a bubble? The Mississippi Bubble revisited
- 5 Sir George Caswall vs. the Duke of Portland: Financial contracts and litigation in the wake of the South Sea Bubble
- 6 The bell jar: Commercial interest rates between two revolutions, 1688–1789
- 7 Comparing the UK and US financial systems, 1790–1830
- 8 Natural experiments in financial reform in the nineteenth century: The Davis and Gallman analysis
- 9 Regulatory changes and the development of the US banking market, 1870–1914: A study of profit rates and risk in national banks
- 10 Anticipating the stock market crash of 1929: The view from the floor of the stock exchange
- 11 The development of “non-traditional” open market operations: Lessons from FDR's silver purchase program
- 12 The interwar shocks to US–Cuban trade relations: A view through sugar company stock price data
- 13 Central bank reaction functions during the inter-war gold standard: A view from the periphery
- 14 When do stock market booms occur? The macroeconomic and policy environments of twentieth century booms
- 15 Lessons from history for the twenty-first century
- Index
- References
11 - The development of “non-traditional” open market operations: Lessons from FDR's silver purchase program
Published online by Cambridge University Press: 04 August 2010
Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- List of contributors
- Preface and acknowledgments
- 1 Financial innovations and crises: The view backwards from Northern Rock
- 2 An economic explanation of the early Bank of Amsterdam, debasement, bills of exchange and the emergence of the first central bank
- 3 With a view to hold: The emergence of institutional investors on the Amsterdam securities market during the seventeenth and eighteenth centuries
- 4 Was John Law's System a bubble? The Mississippi Bubble revisited
- 5 Sir George Caswall vs. the Duke of Portland: Financial contracts and litigation in the wake of the South Sea Bubble
- 6 The bell jar: Commercial interest rates between two revolutions, 1688–1789
- 7 Comparing the UK and US financial systems, 1790–1830
- 8 Natural experiments in financial reform in the nineteenth century: The Davis and Gallman analysis
- 9 Regulatory changes and the development of the US banking market, 1870–1914: A study of profit rates and risk in national banks
- 10 Anticipating the stock market crash of 1929: The view from the floor of the stock exchange
- 11 The development of “non-traditional” open market operations: Lessons from FDR's silver purchase program
- 12 The interwar shocks to US–Cuban trade relations: A view through sugar company stock price data
- 13 Central bank reaction functions during the inter-war gold standard: A view from the periphery
- 14 When do stock market booms occur? The macroeconomic and policy environments of twentieth century booms
- 15 Lessons from history for the twenty-first century
- Index
- References
Summary
Current Federal Reserve Chairman Ben Bernanke (2002) stoked interest in alternatives to conventional open market operations with his consideration of “non-traditional” monetary policy strategies that might be more effective in a low, or zero, interest rate environment. Under such circumstances, the interest rate transmission mechanism for traditional monetary expansion via purchases of government securities becomes less effective. Moreover, if deflation is accompanied by banking crisis, as was the case in the US in the 1930s, then the hoarding of reserves and curtailed bank lending lowers the money multiplier and further emasculates monetary policy. This 1930s-type scenario once again came to the fore in Asia, and Hutchison (2004) ties Japan's declining money multiplier and reduced output effects of monetary expansion after 1997 to a credit crunch associated with banking sector difficulties and lending cutbacks. This has led to calls for broadened monetary policy that is not so dependent upon the interest rate channel and upon banks' willingness to actually lend out the extra reserves generated via traditional open market operations. Fukao, for example, has argued that “laws must be amended to allow the Bank of Japan to buy all securities, not just bonds, for its open market operations and purchase real assets … up to a few trillion yen per month.”
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- The Origins and Development of Financial Markets and InstitutionsFrom the Seventeenth Century to the Present, pp. 319 - 344Publisher: Cambridge University PressPrint publication year: 2009
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