Chapter 1 – Introduction.- Chapter 2 – The literature on monetary policy implementation.- Chapter 3 – The operational framework of monetary policy: a simple model.- Chapter 4 – The European Central Bank: twenty-five years of single monetary policy in the euro area.- Chapter 5 – The Federal Reserve System from the traditional operating framework to the new normal.- Chapter 6 – Unconventional monetary policies in UK and Japan.- Chapter 7 – Future challenges: central bank digital currency and greening monetary policy.

This book addresses the implementation of monetary policy (MP) and focuses on the operations used by the central banks to implement their policies: the so-called operational framework of MP. The operational framework has become of paramount importance in the last fifteen years, due to the profound transformations taking place in this period. The financial crisis, started in August 2007, has rapidly changed the way in which MP is implemented around the world. Further, innovations have been introduced to address other crises in the following years: a new set of “unconventional” instruments have been adopted, like the large-scale purchases of private and government securities and the long-term refinancing operations. The balance sheets of central banks have increased by huge amounts. The recent surge of inflation has induced several central banks to exit those exceptional policies. However, instead of going back to the traditional “interest rate steering” approach, they are going towards a “new normal” that combines some features of that approach with others inherited from the “quantitative easing” experience. The book therefore addresses the following questions: Which are the common stylized patterns of the unconventional MP across the different countries? Did the economic profession work out a theoretical framework within which to place the unconventional MP? Which are the issues related to the exit strategy from unconventional MP? Which are the main features of the operational framework under the “new normal” approach? This book answers these questions by looking at the experiences of the European Central Bank, the Federal Reserve System alongside other central banks, and providing some original modelling and empirical evidence, which will be of interest to academics, researchers in banking and finance, policy makers, and practitioners in the financial industry.

Angelo Baglioni is Professor of Economics at Università Cattolica del Sacro Cuore (UCSC) in Milan, where he teaches Monetary Policy and Financial Economics. He is Director of Osservatorio Monetario, President of REF Ricerche, and Member of the editorial board of lavoce.info. He was Member of the Banking Stakeholder Group of the European Banking Authority. His main research interests are in the fields of monetary policy and financial intermediation. He has written several books (including The European Banking Union: A Critical Assessment, Palgrave Macmillan 2016) and articles published in international scientific journals.