Money and Banking @ HEC is animated by researchers at HEC with interest in monetary issues. The aim the research group is twofold. First, bring together in a fruitful interaction the Macroeconomi and Finance research approach to Monetary Economics. Second, provide a platform to let academics, policymakers and private actors share their views, benefiting from each other angle of observation.

Radical change in the last decade is challanging our current understanding of how modern economic systems work. The great recession of the 2009 marked the start of a new way to thinking to monetary issues around the word. Quantitative easing interventions become the main instrument as rates where constrained at the zero lower bound. These operations have dramatically increases central banks balances sheets without however being able to vehicle through private banks a proportionally large increase in liquid assets for households and businesses. This poses an enourmous challange to research in the field.

The aim of the research center is promoting a better appraisal of the transmission of monetary policy in the "new normal".

Key research questions include without being limited to:

  • How the target and the strategy of central banks should change in the new normal?
  • How bank regulation may impact the transmission of monetary policy to business and households?
  • What are the likely forces shaping the interactions between Monetary and Regulatory authorities, Sovreigns and Banks?

To overcome the new challanges we believe thata more comprehensive Macro-Finance approach is needeed. There is traditionally a strong institutional divide between research on macroeconomics and monetary policy, and research on banking and financial markets. Both in academia and in central banks, research on these topics are typically conducted by different researchers in segmented departments. We believe that this division can have very harmful effects, both for the progress of academic research and for policymaking. Indeed, the Great Financial Crisis  gave a powerful illustration of the importane of studying transmission channels for the successful conduct of monetary policy. This implies looking at the details of banks’ lending and funding decisions, the organization of money and bond markets, financial stability,and other topics traditionally studied in finance departments. Conversely, the unprecented increase in the size of banks’ balance sheet, the impact of non-standard monetary policy on all asset prices, and new regulations make it impossible for anyone interested in financial markets to neglect the role of central banks.

The Money and Banks platform want to be a first step towards that goal.