(IN)EFFECTIVENESS OF THE MONETARY POLICY IN THE PERIOD OF THE GLOBAL CRISIS

During the period of the global crisis, from the second half of 2008 to the first half of 2010, central banking policy was focused on the cutting of the key interest rates and increasing of the money supply. The monetary policy in the euro area played very significant role in stabilization of the financial markets. European central bank implemented a very wide set of the unconventional non-standard measures and through them it succeeded to prevent credit crunch and fall of the financial markets, even a deeper one than it has actually occurred However, monetary policy in euro area has a specific problem: it is burdened by fiscal heterogeneity of the euro area. Croatian national bank successfully preserved the liquidity in the system by operating through the banking capital channel, but impact on real sector was also limited The aim of the paper is to analyze the functioning of monetary transmission channels during the global crisis and to answer how effective in that period was monetary policy, especially in euro area and in Croatia. The special accent is put on the similarity between the situation in which monetary policy was in USA during the Great Depression and situation in which monetary policy was in year 2008 and 2009, especially in euro area, but in Croatia too. According to Keynesian liquidity trap, it is possible to put the question: is the monetary policy in the liquidity trap again?