7th BSP International Research Conference 2018 | Bangko Sentral ng Pilipinas | 24 September 2018 | Manila, Philippines

Central banks are often some of the oldest institutions in countries. They are usually given the responsibility to protect and preserve the value or purchasing power of the currency. While the role and functions of central banks have evolved over time, there are established limits that constrain the actions of central banks. During the Global Financial Crisis (GFC), central banks turned towards the use of unconventional monetary policies (UMP), like quantitative easing, to sustain the functioning of financial markets and intermediation and to provide further monetary policy accommodation at the zero lower bound. These measures challenged the accepted boundaries of central banks and were met with varying reactions.

In the post-GFC era, central banks continue to face a challenging global operating environment characterized by persistently low interest rates, changing inflation dynamics, greater demand and supply shocks, rising policy uncertainty and risk, and technological changes. These are formidable challenges that central banks must contend in the near to medium term.