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In RealTime posts, PIIE senior staff and colleagues discuss the fast-moving economic news, financial developments, and public policy choices confronting the United States and the world.
In the past couple weeks, there have been signals that change is coming to the forecasting and monetary policy process of the Bank of England—incremental change, but change nonetheless. Last year, the Court of the Bank of England commissioned three reviews of various aspects of the Bank’s performance during and after the financial crisis, which [...]
The review [pdf] of the United Kingdom’s monetary policy framework published alongside the budget on March 20 reveals that the UK Treasury has ruled out replacing inflation targeting with nominal GDP targeting. That is a shame. Nominal GDP targeting would provide more space for the Bank of England to support the recovery in the near [...]
Safe assets—often called information insensitive assets—are those debt securities that do not suffer from financial frictions characteristic of other financial assets. They play a major role in the strategies of institutional investors. But as we have learned recently, they can quickly lose their safety status at times of financial crises. In the past few months, [...]
Pity David Cameron. What is a British Prime Minster to do? The UK economy is stagnating even before the spending cuts in his fiscal consolidation program begin to bite. His central bank seems reluctant to provide more monetary stimulus—though that might change with his new handpicked Bank of England governor. Like GOP House Speaker John [...]
Last November, the British Labor leader, Ed Milliband, claimed that Britain is “sleepwalking” out of the European Union. Unfortunately, his assessment appears accurate. As discussed in my letter to the Financial Times today, the current British Conservative-Liberal government under Prime Minister David Cameron seems to have no higher aim with regard to Europe than to [...]
The British economy is lacking productive investment, but not for want of investment opportunities. Banks and large corporations are sitting on cash, households are holding back on large purchases (including of housing), and the public sector is slashing its investment flow. This shortfall reflects the deficiencies of the British domestic financial system, some of them [...]
In his 2010 book, Beyond the Crash: Overcoming the First Crisis of Globalization, former Chancellor of the Exchequer and Prime Minister Gordon Brown took great pride in his fiscal stimulus in early 2009. His intention, as that of all well-meaning Keynesians, was laudably to increase output. However, the United Kingdom has persistently underperformed in terms [...]
Adam S. Posen, who will take over as president of the Peterson Institute for International Economics in January, has delivered a few provocative parting calls to action as he exits his post as an external member of the Bank of England’s Monetary Policy Committee (MPC). His comments favoring more aggressive action by the central bank [...]
The Barclays scandal over manipulation of the LIBOR (an acronym which stands for London InterBank Offered Rate) has put this important monetary indicator in the spotlight in recent days. The LIBOR rate may not be well known to people outside the financial sector, but it affects most people’s lives directly or indirectly, underpinning hundreds of [...]
The Independent Commission on Banking, set up last year by the newly elected UK government and chaired by Oxford economist John Vickers, published its much-awaited interim report on reform options for British banking on April 11. The policy proposals, to be confirmed in a final report in September, are a significant milestone not only for [...]