International Journal of Central Banking Volume 9, Supplement 1 January 2013 Special Supplemental Issue — Central Banking: Before, During, and After the Crisis A Conference to Honor Don Kohn Introduction 1 Opening Remarks 3 Ben S. Bernanke QE1vs.2vs.3...:AFramework for Analyzing 5 Large-Scale Asset Purchases as a Monetary Policy Tool Mark Gertler and Peter Karadi Discussion: Olivier Blanchard 55 Discussion: Varadarajan V. Chari 61 Monetary Aggregates and the Central Bank’s Financial 69 Stability Mandate Hyun Jeong Kim, Hyun Song Shin, and Jaeho Yun An Integrated Framework for Analyzing Multiple Financial 109 Regulations Charles A. E. Goodhart, Anil K. Kashyap, Dimitrios P. Tsomocos, and Alexandros P. Vardoulakis Discussion: Paul M. W. Tucker 145 Discussion: Tobias Adrian 153 Complexity and Monetary Policy 167 Athanasios Orphanides and Volker Wieland Discussion: Lars E.O. Svensson 205 Discussion: Glenn D. Rudebusch 219 Unconventional Monetary Policy Measures: 229 Principles—Conditions—Raison d’ˆetre Jean-Claude Trichet Replumbing Our Financial System: Uneven Progress 251 Darrell Duffie Discussion: Stephen G. Cecchetti 281 A Proposal for the Resolution of Systemically Important 291 Assets and Liabilities: The Case of the Repo Market Viral V. Acharya and T. Sabri Onc¨u¨ Discussion: Andrew Crockett 351 Closing Panel Comments Challenges for the Future 359 Mervyn King Central Banking in a Balance Sheet Recession 367 Jaime Caruana Central Banking: Before, During, and After the Crisis 373 Masaaki Shirakawa The contents of this journal, together with additional materials provided by article authors, are available without charge at www.ijcb.org. Copyright c 2013 by the Association of the International Journal of Central Banking. All rights reserved. Brief excerpts may be reproduced or translated provided the source is cited. Consult www.ijcb.org for further information. The International Journal of Central Banking is published quarterly (ISSN: 1815-4654). Online access to the publication is available free of charge at www.ijcb.org. Individual print subscriptions are available. Orders may be placed by phone (001 415 974 2035), via fax (001 415 974 2168), or by e-mail ([email protected]). Renewals, claims, address changes, and requests for permission to reprint material from this journal should be addressed to: International Journal of Central Banking Economic Research Department Federal Reserve Bank of San Francisco 101 Market Street San Francisco, CA 94105 USA Phone: 001 415 974 2035 Fax: 001 415 974 2168 E-mail: [email protected] The views expressed in this journal do not necessarily represent the views of the Association of the International Journal of Central Banking or any of its members. ISSN: 1815-4654 International Journal of Central Banking Board of Directors Chairman John Murray, Bank of Canada Board Members Q. Farooq Akram, Norges Bank Choy Keen Meng, Monetary Authority of Singapore Abdulrahman Al-Hamidy, Saudi Arabian Loretta J. Mester, Federal Reserve Bank Monetary Agency of Philadelphia David E. Altig, Federal Reserve Bank of Atlanta John McDermott, Reserve Bank of New Zealand Carlos Hamilton Vasconcelos Araujo, Central Bank Maurice McGuire, Central Bank of Ireland of Brazil Deepak Mohanty, Reserve Bank of India Jan Marc Berk, The Nederlandsche Bank Vyacheslav Morgunov, Central Bank of Claudio Borio, Bank for International Settlements Russian Federation Mohamed Tahar Bouhouche, Bank of Algeria Edward Offenbacher, Bank of Israel Laurent Clerc, Bank of France Fabio Panetta, Bank of Italy Francisco G. Dakila Jr., Central Bank of Th´orarinnG. P´etursson, Central Bank of Iceland the Philippines Cristian Popa, National Bank of Romania Spencer Dale, Bank of England Ivan Ribnikar, Bank of Slovenia Jean-Pierre Danthine, Swiss National Bank Harvey Rosenblum, Federal Reserve Bank of Dallas William English, Federal Reserve Board Mark Schweitzer, Federal Reserve Bank Jiang Feng, People’s Bank of China of Cleveland Manuel Ramos Francia, Bank of Mexico Frank Smets, European Central Bank Jeffrey C. Fuhrer, Federal Reserve Bank of Boston Jan Smets, National Bank of Belgium Hiroshi Fujiki, Bank of Japan Kateˇrina Smˇ ´ıdkov´a, Czech National Bank Niels Lyngg˚ardHansen, Danmarks Nationalbank Daniel Sullivan, Federal Reserve Bank of Chicago Dong He, Hong Kong Monetary Authority Altin Tanku, Bank of Albania Luis Oscar´ Herrera, Central Bank of Chile Juha Tarkka, Bank of Finland Heinz Herrmann, Deutsche Bundesbank George Tavlas, Bank of Greece Tor Jacobson, Sveriges Riksbank Joseph Tracy, Federal Reserve Bank of New York Juan F. Jimeno, Bank of Spain Dobieslaw Tymoczko, National Bank of Poland George A. Kahn, Federal Reserve Bank of Kansas City Christopher Waller, Federal Reserve Bank Ali Hakan Kara, Central Bank of Turkey of St. Louis Jun Il Kim, Bank of Korea John Weinberg, Federal Reserve Bank Ana Christina Leal, Bank of Portugal of Richmond Philip Lowe, Reserve Bank of Australia Kei-Mu Yi, Federal Reserve Bank of Minneapolis Editorial Board Managing Editor John C. Williams Federal Reserve Bank of San Francisco Co-editors Pierpaolo Benigno Harrison Hong Rafael Repullo LUISS Guido Carli Princeton University CEMFI Michael B. Devereux Loretta Mester University of British Columbia Federal Reserve Bank of Philadelphia Associate Editors Patrick Bolton Jordi Gal´ı Eli M. Remolona University of Columbia Centre de Recerca en Economia Bank for International Michael D. Bordo Internacional (CREI) Settlements Rutgers University Marvin Goodfriend H´el`eneRey Mark Carey Carnegie Mellon University London Business School Federal Reserve Board Michael B. Gordy Jean-Charles Rochet Pierre Collin-Dufresne Federal Reserve Board University of Toulouse University of Columbia Luigi Guiso Andrew K. Rose Guy Debelle European University Institute University of California, Reserve Bank of Australia Andrew G. Haldane Berkeley Michael B. Devereux Bank of England Klaus Schmidt-Hebbel University of British Columbia Takatoshi Ito Organisation for Economic University of Tokyo Co-operation and Development Douglas W. Diamond (OECD) University of Chicago Graduate David Lando School of Business Copenhagen Business School Lars E.O. Svensson Sveriges Riksbank Francis Diebold Philip Lane University of Pennsylvania Trinity College Dublin J¨urgen von Hagen University of Bonn Michael Dotsey Francesco Lippi Federal Reserve Bank of University of Sassari Ernst-Ludwig von Thadden University of Mannheim Philadelphia Carmen M. Reinhart Darrell Duffie University of Maryland Tsutomu Watanabe Stanford University University of Tokyo Advisory Board Franklin Allen Hyun Shin Michael Woodford The Wharton School of the Princeton University Columbia University University of Pennsylvania Kazuo Ueda John Taylor Charles Goodhart University of Tokyo Stanford University London School of Economics.