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This communication intends to shed light on important aspects related to past, and also recent experiences of monetary policy accommodation, with particular attention to unconventional monetary policies. We intend to draw lessons from these experiences in order to discuss the design of future monetary policy frameworks.
First, by reporting several historical experiences of major central banks (USA 1932, UK and USA 1940s and 1950s, USA 1961, Japan 1999 and 2000s), we highlight that policies which after the 2008 crisis were considered to be “unconventional” (broad liquidity provision operations, asset purchases programs, yield curve controls, etc.) were not new. Even if in some of those past experiences central banks took a considerable time to act, they ended up intervening to avoid a broader deterioration of macroeconomic and financial conditions.
Moreover, we describe the recent experience of the European Central Bank after 2008. This institution has adapted its measures according to its own former programs (“learning by doing”), and to other central banks experiences (“learning by observing”), in order to face the numerous challenges posed by Euro area's macroeconomic/financial conditions and to enhance its framework.
Finally, we center our attention on the discussion about how will be shaped future monetary policy frameworks, and to which extent policies previously classified as “unconventional” will be removed, or maintained (and considered as new tools available in monetary policy frameworks). We participate to the literature by arguing that central banks should not merely promote a complete return to pre-2008 standards (“normalization”), but need to take advantage from the old and more recent experiences in order to improve their future monetary policy frameworks. Based on this, measures previously implemented would have three possible destinations in new frameworks: i) Be discarded, due to their predominantly negative effects; ii) Not be regularly implemented, but be kept as a tool if needed to achieve central banks' goals, specially under situations of crisis; iii) Be incorporated as a regular measure of the monetary policy framework. In this sense, monetary authorities will need to be increasingly evolving institutions, in a continuously adaptive and innovative process, in order to face the challenges posed by financial markets that are each day more dynamic, innovative, complex, interconnected and globalized.
