Research by the School's Centre for Finance, Credit and
Macroeconomics (CFCM) on the monetary transmission mechanism has
been influential in improving the design, implementation and effectiveness
of the monetary policies of a number of central banks, including the Bank
of England, Banque de France and the European Central Bank.
The research has influenced changes in the way that official monetary
aggregates are measured so as to capture the impact of non-bank financial
institutions on the money supply and credit availability, and in better
understanding of how monetary policy affects different interest rates.
This in turn has allowed for improved control by central banks of their
policy targets, and for better understanding of the effects of their
monetary policies on economic activity and inflation.
Research published between 2003 and 2010 on central bank design has
established Sibert as an internationally-recognised authority whose ideas
have changed the way that policy makers, academics and the public think
about monetary policy committees and have influenced efforts to increase
the accountability of these committees and the call to increase female
participation, particularly at the Bank of England and the European
Central Bank. Recognition of the practical value of this research-based
understanding is evident in her 2009 appointment to the newly-formed
Icelandic five-member monetary policy committee.
Sibert's research investigates the structure of central banks and
monetary policy committees, as well as other decision-making groups, and
on how their design affects their performance. In particular, she focuses
on how it matters that monetary policy is made by a group rather than an
individual and how a monetary policy committee can be designed to produce
the best possible outcome for monetary policy. She communicates her
research through refereed journal articles, invited publications; policy
articles, speeches and opinion pieces.
Giancarlo Corsetti has a long-term engagement with monetary authorities
(the European Central Bank and since 2010 the Bank of England) where his
research has had an impact on the development of frameworks for analysing
stabilization policies in open economies. Since September 2010, his
research has specifically focused on: (a) monetary policy trade-offs
between internal objectives and exchange rate misalignment and external
imbalances; (b) macroeconomic stabilization with high and variable
sovereign risk; (c) the design of a monetary backstop to government debt.
The research has had an impact through setting policy research agendas;
through the inputs into scenario and econometric analyses; through forming
the basis of Giancarlo's contribution to high-level policy seminars and
the basis of his training of central bank officers.
Monetary policy and its effect on the wider economy are important for
South Africa's objective of
achieving both high economic growth and low inflation — which are deemed
to contribute to the
government's and electorate's greater objectives of reducing poverty and
The central bank (South African Reserve Bank, SARB) and the National
responsibility for both monetary policy and the oversight of the financial
sector. Laurence Harris's
research on the links between monetary policy, financial sector
development, and their connection
with the financing and investment decisions made by businesses has led
both institutions to seek
and act on his advice.
The global financial crisis of 2008 required policy makers to restructure
radically banking systems through re-capitalization, essentially injecting
capital to the banks. The Unit's research has shown that recapitalization
policy has the potential to impose significant costs on the wider economy
and on the banking system in particular. This research brings this
trade-off to the attention of policy-makers at central banks who will now
be better informed about the nature of the associated costs. . Our
research outputs enabled some of these policy-makers to decide at which
point on the trade-off they might wish to locate their policy choices.
Research by Surrey's Centre for International Macroeconomic Studies
(CIMS) has had significant
impact on monetary policy in several emerging economies.
This case study highlights impact in Nigeria and Pakistan. Both are
economies: Nigeria is the second largest economy in Africa and ranks 30th
by world GDP (adjusted
for purchasing power parity), while Pakistan ranks 27th; yet
GDP per capita is relatively low in both.
Since 2008, Surrey research has: (1) led to the establishment of a new
Centre for Survey
Research at the State Bank of Pakistan, collecting data that have directly
influenced the Bank's
monetary policy; (2) steered reform of the macroeconomic models used by
the State Bank and the
Central Bank of Nigeria; and (3) helped develop a new approach to monetary
The demise of Lehman Brothers in 2008 marked the start of the current
financial crisis and illustrated some of the adverse consequences of
linkages between banks. The prospect of systemic crises has concerned bank
regulators and monetary policy authorities for many years. Research by
Professor Altunbaş at Bangor Business School, in close collaboration with
the European Central Bank (ECB), has had substantial impact over 2008-2013
by influencing priorities in the international policy debate on how bank
innovation can influence the conduct of monetary policy. It shows that the
effectiveness of traditional monetary policy transmission mechanisms
(such as the bank lending channel) is reduced by securitization
activity and this also exacerbates the risk-taking channel
of monetary policy. Evidence of the impact and overall scope of Professor
Altunbaş' research is reflected in reference to his research at the
highest monetary policy levels in Europe as well as widespread recognition
in official central bank and international organization publications.
Research at Oxford by members of the International Growth Centre (IGC),
funded by the Economic
and Social Research Council (ESRC) and the Department for International
has played an important role in shaping two key areas of monetary and
exchange rate policy
formulation in East Africa.
Research on food prices and inflation in Tanzania is providing
the technical basis for the
discussions of the Monetary Policy Committee (MPC) of the Bank of
Tanzania, and has contributed
to current thinking by the African Development Bank (ADB) on policy
responses to global food
price volatility in East Africa.
Work on exchange rate policy has helped shape the Draft Protocol
on East African Monetary Union
currently being negotiated between the East African Community (EAC)
partner states (Kenya,
Uganda, Tanzania, Rwanda and Burundi).
Since the financial crisis of 2007-8, many failing banks have had to be
rescued. Rescue has taken different forms, including acquisition by
rivals, public subsidies, and nationalisation.
Research at University of Leicester contributed to the changing of
perceptions on the relative merits of these options, by showing that the
cost of bank nationalisation had previously been over-estimated. This work
paved the way for a wave of bank nationalisations that occurred during the
financial crisis of 2007-8. Demetriades directly applied the
findings of his research in the rescue of the crisis-hit Cypriot banking
sector, following his appointment as Governor of the Central Bank of
Cyprus and member of the European Central Bank governing council in 2012.
The risk of a systemic crisis and the inability of depositors to monitor
how banks are governed are long-standing public policy concerns. Since
joining Bangor University in 2008 Professor Klaus Schaeck and
collaborators from central banks and international financial organisations
have worked to inform the global policy debate on these issues.
Specifically, how varying competitive conditions, corporate governance
structures and regulatory innovations incentivise the development of safer
and sounder banking systems. Notable impacts of Schaeck's research since
2008 include: the use by central banks of his new methodology to gauge
banking sector competition; priority change in the policy debate over the
structure of bank boards and, in particular, the influence of female
executives; and finally heightened policy awareness of the unintended
consequences of regulations imposed on troubled or bailed-out banks.