RBS's Davies: Lack of Good Mechanism to Combine Fiscal, Monetary Policy

The video discusses the challenges of negative interest rates, particularly their impact on bank profitability and the transmission mechanism between monetary policy and the real economy. It explores the concept of direct money, also known as helicopter money, as an alternative. However, it highlights the difficulties in implementing such a policy, including deciding the distribution of funds and the lack of a cohesive mechanism to integrate fiscal and monetary policy effectively.

What is a potential consequence of negative interest rates on banks?

• Reduced bank profitability

• Enhanced lending practices

• Increased bank profitability

• Improved economic growth

What is another term used for 'direct money'?

• Helicopter money

• Monetary tightening

• Quantitative easing

• Fiscal stimulus

What is a major challenge in implementing direct money?

• Reducing fiscal deficits

• Deciding the interest rates

• Determining the recipients and amount

• Increasing bank capital

Why is a new mechanism needed for direct money?

• To enhance global trade

• To reduce inflation

• To ensure money is injected sensibly

• To increase bank profits

What is the current status of finding a solution for combining fiscal and monetary policy effectively?

• No good solution has been produced yet

• The problem has been resolved

• Several solutions are available

• A perfect solution has been found