Contributions on monetary and financial issues: an introduction

Abstract

The present issue of PSL Quarterly Review includes three articles: by Mario Sarcinelli, on the need for structural regulations on financial institutions in order to avoid a new systemic crisis; by Mario Tonveronachi, on the limits of the official regulatory responses to the current crisis; by Hossein Askari and Noureddine Krichene, on the inflationary pressures in world commodity markets stemming from expansionary monetary policy. In the aftermath of the world financial crisis, the immediate policy response was necessarily directed to re-establishing working conditions in national and international financial markets, and to set out cushions to the impact of the financial crisis on the real economy, especially on employment. Both objectives implied very strongly expansionary monetary and financial policies. It was clear from the outset, however, that such policies could not be maintained for an indefinitely long span of time. The way financial speculation operates on public and external debt imbalances – with sudden increases in risk spreads, hence increasing the cost and difficulty of debt financing – strengthens the already existing negative asymmetry in policy responses. That is, it puts strong pressure on deficit countries to adopt drastic readjustment policies which are clearly counterproductive for activity levels and employment, while surplus countries (especially those with external surpluses) do not stand equal pressure to adopt reflationary policies.

JEL Codes: F3, G1, N1, B5