Central Banks Into The Breach

Central banks play an important role in the course of national economies and the global economy. Their leaders are regularly feted or vilified, their policy pronouncements highly anticipated and routinely scrutinized. This is all the more so since the global financial crisis. The past fifteen years in monetary policy is essentially the story of two mistakes and one triumph, argues Pierre L. Siklos, a professor of economics at Wilfrid Laurier University. One mistake was that central bankers underestimated the connection between finance and the real economy. The other was a failure to realize how inter-connected the world's financial system had become. The triumph, in turn, was the recognition that price stability is a desirable objective. As a result of the financial crisis, central banks stepped into the breach to provide services other institutions were unwilling or unable to carry out. In doing so, the responsibilities for governing monetary policy and financial system stability became more elastic without due consideration for the appropriateness of the division of responsibilities. Central banks no longer influence just prices they also change financial system quantities. This leads to rising policy uncertainty. And low economic growth, an insufficiently unsubstantiated expansion of central bank responsibilities, and worries over future financial instability are sources of concern that contribute to a loss of confidence in the monetary authorities around the globe. Because no coherent new framework for central bank policy has since emerged, central banking is not broken, but it is in need of repair. Central Banks into the Breach provides an overarching analysis of the current and vulnerable state of central banks and offers potential solutions to stabilize the uncertain future of central banking.

This book is the first complete survey of the evolution of monetary institutions and practices in Western countries from the Middle Ages to today. It radically rethinks previous attempts at a history of monetary institutions by avoiding institutional approach and shifting the focus away from the Anglo-American experience. Previous histories have been hamstrung by the linear, teleological assessment of the evolution of central banks. Free from such assumptions, Ugolini’s work offers bankers and policymakers valuable and profound insights into their institutions. Using a functional approach, Ugolini charts an historical trajectory longer and broader than any other attempted on the subject. Moving away from the Anglo-American perspective, the book allows for a richer (and less biased) analysis of long-term trends. The book is ideal for researchers looking to better understand the evolution of the institutions that underlie the global economy.

Understand the theories and interpret the actions of modern central banks Central Banking takes a comprehensive look at the topic of central banking, and provides readers with an understanding and insights into the roles and functions of modern central banks in advanced as well as emerging economies, theories behind their thinking, and actual operations practices. The book takes a systematic approach to the topic, while providing an accessible format and style that is appropriate for general audiences and students with only a minimal macroeconomic background. Theoretical reviews and examples of how the theories are applied in practice are presented in an easy-to-understand manner and serve as a guide for readers to further investigate specific ancillary central banking topics and as a means to make informed judgments about central bank actions. Important topics covered in the book include: Evolution of central banking functions and the international monetary system Theoretical backgrounds that are the foundation to the modern practice of monetary policy Monetary policy regimes, including exchange rate targeting, money supply growth targeting, the risk management approach, inflation targeting, and unconventional monetary policy. Actual practice in market operations and transmission mechanisms of monetary policy The exchange rate and central banking Theoretical backgrounds related to various dimensions of financial stability Current developments with regards to sustaining financial stability The future of central banking in the wake of the 2007-2010 global financial crisis Case studies on relevant practical issues and key concepts in central banking Designed as essential reading for students, market analysts, investors, and central banks' new recruits, Central Banking better positions readers to interpret the actions of central banks and to understand the complexities of their position in the global financial arena.

Using a central bank legislation database, this paper documents and analyzes worldwide institutional arrangements for central bank lending to the government and identifies international practices. Key findings are: (i) in most advanced countries, central banks do not finance government expenditure; (ii) in a large number of emerging and developing countries, short-term financing is allowed in order to smooth out tax revenue fluctuations; (iii) in most countries, the terms and conditions of these loans are typically established by law, such that the amount is capped at a small proportion of annual government revenues, loans are priced at market interest rates, and their maturity falls within the same fiscal year; and (iv) in the vast majority of countries, financing other areas of the state, such as provincial governments and public enterprises, is not allowed. The paper does not address central banks' financial support during financial crises.

This comprehensive Handbook provides an analysis of the key issues, accomplishments, and challenges of research and practices related to the interactions between business and public policy.

More than ten years on from the most intense phase of the global financial crisis, and the collective international response in the G20 summit in London, a ‘new normal’ has emerged with systems in place to mitigate against further banking crises. This updated new edition analyzes this post-crisis international and national regulatory framework and asks whether the current paradigm is fit for purpose as new dangers gestate and develop. This new edition includes a discussion of the impact of the aggressively deregulatory and anti-globalist policies of the Trump administration and its pursuit of an ‘America First’ policy and explores its implications for the regulatory landscape constructed and tended by previous leaders. The author addresses new and future systemic risks, many outside the regulated banking sector, which have grown in importance since 2015. He develops possible future scenarios for the international regulatory architecture, both negative and positive, asking, ‘Are we better prepared for future banking crises?’ New risks, including the COVID-19 pandemic and economic crash, are testing the global system; and the G20, without US leadership, may be failing in this latest most severe crisis of our lifetimes. This book provides a unique narrative explanation drawn from leading actors of key events and policy changes as they unfolded immediately post-crisis. The author builds upon the first edition to capture key developments that have occurred during the past five years, while raising key questions and vulnerabilities, and looking at future risks and challenges that may emerge. This text will be of great interest to students, teachers and researchers of financial frameworks, globalisation and political economy.

This is a short, inexpensive textbook that teaches students the fundamentals of money and banking in a clear, narrative form.

Central banks have emerged as the key players in national and international policy making. This book explores their evolution since World War II in 20 industrial countries. The study considers the mix of economic, political and institutional forces that have affected central bank behaviour and its relationship with government. The analysis reconciles vastly different views about the role of central banks in the making of economic policies. One finding is that monetary policy is an evolutionary process.