<abstract xmlns="http://www.w3.org/1999/xhtml">The article discusses the status and role of regulatory bodies and the aftermaths of their independence and accountability to the public and the parliament. The author analyses different legal statuses of regulatory bodies in Montenegro and Serbia in the central banking and energy sectors and concludes that it is necessary that national constitutions, as the highest legal acts in each state, prescribe in a separate article that “Regulatory bodies are independent and accountable to Parliament”.Relevant separate legal acts should closely define the procedures for establishing, enforcing, and sanctioning of possible breaching of: 1) independence of regulatory bodies, 2) accountability of regulatory bodies to the parliament, and 3) transparency of their activities.</abstract>

Role of Regulatory Bodies in the Banking and Energy Sectors

<abstract xmlns="http://www.w3.org/1999/xhtml">The 2008 and 2011 crises have durably affected the conditions of monetary policy transmission, particularly in the euro area. However, it is generally considered that the European Central Bank’s (ECB) monetary policy truly became unconventional only at a late stage. Our contribution is threefold. We first show that the notion of “conventional” monetary policy, which is the reference of this assessment, is a recent theoretical construction. Secondly, the mandate of the ECB, which is its institutional expression, may raise specific difficulties in managing major financial crises, particularly with regards to the forward guidance of expectations and the commitment to an accommodative policy. Finally, the resulting policies have, at this stage, paradoxically achieved acceptable levels of macroeconomic and overall financial stability, but failed to restore a private funding supply to the banking sector enabling it to play its normal role in financing economic activity.</abstract>

The ECB, Between Conservatism and Pragmatism

<abstract xmlns="http://www.w3.org/1999/xhtml">This concise study analyses the symmetry of financial markets’ responses to macroeconomic policy interaction in the United Kingdom. Employing the Vector Auto-regression (VAR) model on monthly data of the British financial sector and macroeconomic policies from January 1985 to August 2008, this study found that the equity and sovereign debt markets showed identical symmetry in response to macroeconomic policy interaction.</abstract>

Macroeconomic Policies Interaction &amp; the Symmetry of Financial Markets’ Responses

<abstract xmlns="http://www.w3.org/1999/xhtml">This paper combines analysis of evolution in euro area government bond market integration and interference of European Central Bank with functioning of respective market recently. Since the introduction of euro, government bond yields converged in the euro area, bonds of different countries have become close substitutes in the perception of investors, and overall integration of the market was rather high. At the end of 2008, dramatic shift occurred and ever since disintegrative forces were set in motion. The paper presents the following measures of integration of the government bond markets: yield spreads, dispersion in yield spreads and beta coefficient. All three measures suggest unprecedented market disintegration as of 2010. The paper highlighted relevance of sovereign bond market for the smooth functioning of the monetary policy transmission mechanism in a monetary union context. Three ECB’s programmes aimed at sovereign debt crisis resolution were analysed in details. They proved successful in lowering peripheral countries’ yields and spreads, and calming the markets. If one takes central bank function of the lender of last resort for banks, then these programmes may be viewed as the “buyer of last resort” device for government bonds. Although warranted by exceptional circumstances and need for swift response, a due caution should be paid to these programmes since they pose certain challenges for conduct of monetary policy and might even have unintended consequences.</abstract>

Integration of Government Bond Market in the Euro Area and Monetary Policy

<abstract xmlns="http://www.w3.org/1999/xhtml">In monetary economics literature, there is an agreement that monetary policy has a lagged effect on inflation. As a result of this agreement, monetary policy reaction functions that include expected inflation, instead of current or lagged inflation, are established. On the other hand, there is uncertainty about how much time monetary policy needs to affect inflation. The purpose of this paper is to estimate empirically how far ahead the Central Bank of the Republic of Turkey looks. In other words, the paper examines whether the CBRT takes into consideration 12-month ahead inflation expectations or 24-month ahead inflation expectations while steering interest rates. According to the results of the paper, the CBRT considers 12-month ahead inflation expectations while steering interest rates.</abstract>

How Far Ahead Does the Central Bank of the Republic of Turkey Look?<xref ref-type="fn" rid="fn1_w2aab2b8b7b1b7b1ab1aaAa">1</xref>

<abstract xmlns="http://www.w3.org/1999/xhtml">This paper considers financial stability through the processes of accumulation and materialisation of systemic risks. To this end, the method of principal component analysis on the example of Croatia has been used to construct two composite indicators – a systemic risk accumulation index and an index reflecting the consequences of systemic risk materialisation. In the construction of the indices, the features and risks specific to small open economies were considered. Such an approach to systemic risk analysis facilitates the monitoring and understanding of the degree of financial stability and communication of macroprudential policy makers with the public.</abstract>

Financial Stability Indicators – The Case of Croatia<xref ref-type="fn" rid="fn1_w2aab2b8c15b1b7b1ab1aaAa">1</xref>

<abstract xmlns="http://www.w3.org/1999/xhtml">Applying IS-MP-IA model and the Taylor rule to selected Southeast European economies (Albania, Bosnia and Herzegovina, Macedonia and Serbia) we find that the change of effective exchange rate positively affects output, while the change of the world interest rate negatively affects output or it does not affect the output at all, and additional world output would help to increase output of the selected economies.A lower ratio of government consumption spending to GDP would also increase the output of the selected economies. Hence, fiscal prudence is needed, and the conventional approach of real depreciation to stimulate exports and raise real output does not apply to the selected Southeast Europe economies.When private household consumption is employed in the model, the coefficient on government spending to nominal GDP is insignificant implying that Ricardian equivalence does hold for the selected countries.</abstract>

Aggregate Demand–Inflation Adjustment Model Applied to Southeast European Economies

<abstract xmlns="http://www.w3.org/1999/xhtml">The paper contains an analysis of the economic and regulatory concept of bank liquidity in the context of systemic liquidity shock. A formal model analysis shows that the application of liquidity coverage ratio (LCR) based on Basel III will lead to a significant adaptation of banks liquidity management. LCR causes a change in bank’s liquidity allocation and funding to be less effective and more costly and restrictive for providing credits comparing with economic determinants. It is demonstrated that the application of LCR underestimates actual liquidity position of a bank and leads to allocation ineffectiveness. The empirical part contains simulation of impacts of systemic liquidity shock on the banking sector’s ability to withstand the unfavourable credit shock while solvency is maintained. The results confirm the robustness of the Czech banking system ensuing from the systemic surplus of liquidity, high volume of bank capital and its high profitability. The estimations of the VAR model show that the relations between liquidity characteristics of banks, sources of aggregate liquidity shock, interbank market illiquidity and the credit facilities of the Czech National Bank are relatively weak, supporting the conclusion that the banks face liquidity shocks of non-persistent character.</abstract>

Systemic Liquidity Shocks and Banking Sector Liquidity Characteristics on the Eve of Liquidity Coverage Ratio Application - The Case of the Czech Republic<xref ref-type="fn" rid="fn1_w2aab2b8b1b1b7b1ab1aaAa">1</xref>

AHEAD OF PRINT

Volume 13 (2024): Issue 1 (January 2024)

Volume 12 (2023): Issue 3 (September 2023)

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Volume 6 (2017): Issue 3 (September 2017)

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Volume 6 (2017): Issue 1 (January 2017)

Volume 5 (2016): Issue 3 (September 2016)

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Volume 5 (2016): Issue 1 (January 2016)

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Journal of Central Banking Theory and Practice

 The Journal of Central Banking Theory and Practice is a scientific and professional journal that the Central Bank of Montenegro publishes thrice a year. The journal has been published since 2012. The most stringent international standards are followed in the publication of papers and reviews which imply "double-blind" review.Journal of Central Banking Theory and Practice is a scientific journal dedicated to publishing quality papers and disseminating original, relevant and applicable economic research. Scientific and professional papers that are published in the Journal of Central Banking Theory and Practice cover theoretical and practical aspects of central banking, monetary policy, including the supervision issues, as well as banking and management in central banks.The purpose of the journal is to educate the general public about the key issues that the central bankers globally face, as well as about contemporary research and achievements in the field of central banking theory and practice.  Archiving  Sciendo archives the contents of this journal in Portico - digital long-term preservation service of scholarly books, journals and collections.  Plagiarism Policy  The editorial board is participating in a growing community of Similarity Check System's users in order to ensure that the content published is original and trustworthy. Similarity Check is a medium that allows for comprehensive manuscripts screening, aimed to eliminate plagiarism and provide a high standard and quality peer-review process. 

Journal of Central Banking Theory and Practice

Volume 5 (2016): Issue 1 (January 2016)

Role of Regulatory Bodies in the Banking and Energy Sectors

The ECB, Between Conservatism and Pragmatism

Macroeconomic Policies Interaction & the Symmetry of Financial Markets’ Responses

Integration of Government Bond Market in the Euro Area and Monetary Policy

How Far Ahead Does the Central Bank of the Republic of Turkey Look?¹

Financial Stability Indicators – The Case of Croatia¹

Aggregate Demand–Inflation Adjustment Model Applied to Southeast European Economies

Systemic Liquidity Shocks and Banking Sector Liquidity Characteristics on the Eve of Liquidity Coverage Ratio Application - The Case of the Czech Republic¹

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