The events of the last year have reminded us all that a central bank does not just have one responsibility, that of achieving price stability. It is indeed its first core purpose (CP1); but as the sole institution that can create cash, and hence bank reserve balances, a central bank has a responsibility for acting as the lender of last resort and maintaining financial stability.
Central banks’ function to maintain financial stability: An uncompleted task
Charles A.E. Goodhart, 24 June 2008
Why central banking is no longer boring
Guido Tabellini, 23 June 2008
Until a year ago, central bankers could boast with satisfaction that monetary policy had become boring. A widely shared “best practice” was followed by almost all central banks. Any controversies concerned technical nuances that were really only relevant to professionals in the field. Then came the credit crisis – and all certainties went out the window.
Can central banks talk too much?
Camille Cornand, Frank Heinemann, 27 May 2008
While practitioners in central banks and international institutions agree on the desirability of informative announcements and promote greater transparency on the ground that any information is valuable to markets, recent academic literature argues that public announcements may destabilise markets by generating some overreaction.
Can Central Banks Go Broke?
Willem Buiter, 17 May 2008
Buiter’s warning: Who is the recapitaliser of last resort for the ECB?
Richard Baldwin, 8 May 2010
The Fed, Bank of England and ECB have recently loaned money to banks against collateral that is riskier than usual – including mortgage-backed securities that are at the heart of the current crisis. Since some of these loans could go bad, questions arise: Can the central bank go broke? Who would recapitalise it if it did?
What we know and what we would like to know about central bank communication
Alan S. Blinder, Michael Ehrmann, Marcel Fratzscher, Jakob de Haan, David-Jan Jansen, 15 May 2008
Central banks used to be shrouded in mystery – and believed they should be.1 A few decades ago, conventional wisdom in central banking circles held that monetary policymakers should say as little as possible and say it cryptically. Over recent years, the understanding of central bank transparency and communication has changed dramatically.
Avoiding Disorderly Deleveraging
Luigi Spaventa, 7 May 2008
Avoiding disorderly deleveraging
Luigi Spaventa, 8 May 2008
Prolonged financial distress, which has now lasted for almost a year, is debilitating the financial system and risking a full-fledged crisis. Central bank interventions have thus far prevented worst-case outcomes, but they have alleviated symptoms rather than the underlying causes.
The Need for an Emergency Bank Debt Insurance Mechanism
Javier Suarez, 27 March 2008
Bagehot, central banking, and the financial crisis
Xavier Vives, 31 March 2008
The present financial crisis poses two main questions: whether it is similar to past crises and how central banks should intervene to preserve the stability of the system.
- A tale of two depressions: What do the new data tell us? February 2010 updateEichengreen, O’Rourke
- The ECB’s stealth bailoutSinn
- Educated in America: College graduates and high school dropoutsHeckman, LaFontaine
- Eurozone breakup would trigger the mother of all financial crisesEichengreen
- Panic-driven austerity in the Eurozone and its implicationsDe Grauwe, Ji
Adelman, 28 October 2013
Reichlin, Giugliano, 7 November 2013