E58 - Central Banks and Their PoliciesReturn

Using local projection (LP) method, we assess Credit Default Swap (CDS) changes in the Central-East European countries. Cost-risk optimization in public debt management refers on the fine-tuning the ratio of capital import and foreign currency denominated borrowing to domestic funds. Literature defines closeness centrality as an indicator which highlights the relative importance of an asset within a network, estimated by a quarterly minimum spanning tree graph. We show that CDS changes are driven not only by the foreign exchange shocks but also by foreign currency debt and funding as well as the closeness indicator which signs a network-bias. We also find evidence that relative isolation better describes the Czech sovereign debt market. Thus, this paper makes a new contribution to the debate of public debt funding strategies, while highlighting the importance of network-biases.

Nowadays, the examination of bond markets is becoming more prominent as there have been significant changes in the financial market and economic policy processes due to the diverse economic shocks. The room for manoeuvre available for monetary policy is no longer a function of base rates, but rather of the growth of central bank balance sheets – which can also have side-effects on bond yield progresses. Also, QE is only the privilege of large central banks, if smaller central banks use these programs the yield premium will be elevated. Six European small open economies (Czechia, Denmark, Hungary, Poland, Switzerland, Sweden) outside the Eurozone were investigated on quarterly basis between 2007 and 2020 with Autoregressive Distributed Lag (ARDL) cointegration technique.  The aim of our research was to identify the effects of the recent economic shocks - the economic crisis of 2008, the subsequent European sovereign debt crisis and the current corona virus epidemic - on the evolution of international bond yield premia time series in the light of monetary policy, macro variables and financial markets. The results were typically in line with expectations, except that no significant bond market impact of portfolio capital flow could be measured on the sample. The main outcome proved that the unconventional monetary policy increased yield premiums in these analysed countries, meaning that QE is not for small and open economies.

The aim of this paper is to make a comparison of the banking sector in the Czech Republic and United Kingdom. Selected banking sectors are compared according to independence of their central bank, the regulation and supervision of financial markets in these countries, the type of banking, financial institutions, inflation targeting, interest rates and capital adequacy. The banking sector in the Czech Republic and the United Kingdom are part of the European financial market. Yet they show differences that are caused by the historical development and the different position of central banks and their policy during financial crises. Comparison of banking systems and central banks is performed based on descriptive and measurable indicators. Selected central bank used unconventional monetary policy response to the challenges of the financial crisis. The biggest difference lies in the regulation of banking sectors monitored and used instruments of monetary policy in times of financial crisis and they differ also in the used models of banking systems.

The aim of this paper is to evaluate mutual interaction of fiscal and monetary policy in the Czech Republic and in Slovakia. The relationship - cooperation or conflict, are basic determinants of successful implementation for economic policy of the state. Fiscal and monetary policies have usually different aims and some conflict situations may arise. The game-theoretical approach is responsible for creating the theoretical model, which is then dealt with the empirical analysis by the method of the ordinary least squares. We find a stabilizing role of monetary policy in both countries and the dominant role of monetary policy in the Czech Republic.