Question

Central banks in the UK, euro area, Japan, Sweden, Denmark and elsewhere have already cut interest rates to zero or even below. What more can monetary policy realistically do in these countries to assist the recovery of the real economy? and Is the Bank Recovery and Resolution Directive likely to avoid the use of taxpayers’ money in tackling future financial crises in the euro area?

Answer 1

Countries facing recessionary curves and slowdowns must be assisted by expansionary monetary policy by adoptiin if tools like buying off government bonds and securities in open market operations, cutting down SLR and CRR and easing out lending policies so that liquidity crunch gets eliminated and the economy kicks off consumption and aggregate demand which ultimately results in real GDP growth.

Bamks Recovery and dispute resolution helps in adoption of uniform bankruptcy codes and hiving off all non performing assets and hence cleans up balance sheets, deleverages deb. Thus it means banks have enough cash flows in future making taxpayers money safer and unused and thus this Resolution gets more prevalent and practised efficiently as clean up drive for banks in Euro Area.