Central Bank Policies' Financial Crisis Mitigation Effectiveness

Abstract

Central banks are essential for financial system stabilisation and crisis mitigation. Emergency loans, interest rate rises, and quantitative easing are central banks' economic slump remedies. The research examines how central bank actions calmed markets, boosted economic recovery, and prevented systemic failures during severe financial crises as the COVID-19 epidemic and the 2007–2008 Global Financial Crisis. Central banks struggle with monetary policy restrictions, over-intervention, and the conflict between short-term stability and long-term growth. illuminate how these institutions may prepare for future financial shocks by understanding central bank crisis strategies' pros and disadvantages. The results demonstrate that central bank actions are vital for crisis management but must be fine-tuned to avoid unintended consequences and maintain economic stability.