Analysis of the Fed's Implementation Plan to Tackle the Financial Crisis in 2008

Author:

Pan Junxu

Abstract

After the financial crisis, quantitative easing policy played an important role as the main body of the Federal Reserve's unconventional monetary policy. From the market environment at that time, the emergence of quantitative easing policy will play a positive role through the interest rate commitment effect. In times of crisis, it is feasible for the Fed to use some extent, and can be used as a reference to save the crisis in the future. The central bank should play an effective and active role in maintaining financial stability. In times of crisis, central banks should focus on providing liquidity, and even act as an important intermediary to the financial system, just as the Fed has done in this crisis. The crisis shows that, in the case of market failure, the central bank can effectively prevent the bank failure, and clean up the panic and spread caused by the collective irrational behavior. In the systemic financial crisis period, the central bank will actively innovate the rescue plan from the Fed's crisis rescue, open discount Windows to non-bank financial institutions, expand the scope of acceptable collateral, and access the financial markets to buy and sell private sector securities to maintain the financial system. Through a series of measures and corresponding results of the Federal Reserve to deal with the crisis, this paper provides a reference for the international countries facing similar problems and forms a complete evaluation system to establish the appropriate crisis management model for the international financial framework.

Publisher

Boya Century Publishing

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