Challenges in Central Banking

Changes in the field of central banking over the past two decades have been nothing short of dramatic. They include the importance of central bank autonomy, the desirability of low and stable inflation, and the vital role played by how central banks communicate their views and intentions to the markets and the public more generally. There remains considerable diversity nevertheless in the institutional framework affecting central banks, the manner in which the stance of monetary policy is determined and assessed, and the forces that dictate the conduct of monetary policy more generally. The global financial crisis, which began in the United States in 2007, only serves to highlight further the importance of central bank policies. The aim of this volume is to take stock of where we are in the realm of the practice of central banking and considers some of the implications arising from the ongoing crisis. Review of the hardback: 'Serious scholarship on central banking has burgeoned in recent years, thanks in no small measure to the authors represented in this timely volume. Because it arrives just as the challenges to central banking are reaching unprecedented heights, every student of central banking should keep a copy handy.' Alan S. Blinder, Princeton University Review of the hardback: 'Central banks are under the spotlight - and under the gun - as a result of extraordinary actions taken in response to the financial crisis. Interest in questions like whether they should attempt to anticipate and how they should respond to threats to financial stability and whether they are sufficiently accountable for their steps and missteps now extends far beyond the standard scholarly circles. As more people begin to worry about these issues, one hopes that they will look to the important and timely studies collected here.' Barry Eichengreen, University of California, Berkeley Review of the hardback: 'This fine collection of essays provides a state-of-the-art guide to the hottest issues in central banking. No practitioner or policymaker can afford to be without it.' Andrew Rose, University of California, Berkeley Review of the hardback: 'This is an amazing book that deciphers the amazing transformation of central banking since the 1980s. It brings together leading economists, many of whom were instrumental in this transformation as researchers, central bankers, and teachers, often combining these roles. The result is a very effective shortcut to a huge literature.' Charles Wyplosz, Graduate Institute of International Studies, Geneva, Switzerland1. The state of play in central banking and the challenges to come Pierre L. Siklos, Martin T. Bohl and Mark E. Wohar; Part I. Past, Present, and Future in the Conduct of Monetary Policy: 2. Is time ripe for price level path stability? Vitor Gaspar, Frank Smets and David Vestin; 3. The principal-agent approach to monetary policy delegation Georgios E. Chortareas and Stephen M. Miller; 4. Implementing monetary policy in the 2000s: operating procedures in Asia and beyond Corrinne Ho; Part II. The Scope of Central Banking Operations and Central Bank Independence: 5. Analysis of financial stability Charles A. E. Goodhart and D. P. Tsomocos; 6. National central banks in a multi-national system David G. Mayes and Geoffrey E. Wood; 7. The complex relationship between central bank independence and inflation Bernd Hayo and Carsten Hefeker; 8. Independence and accountability in supervision: comparing central banks and financial authorities Donato Masciandaro, Marc Quintyn and Michael W. Taylor; Part III. Transparency and Governance in Central Banking: 9. The economic impact of central bank transparency: a survey Carin van der Cruijsen and Sylvester C. W. Eijffinger; 10. How central banks take decisions: an analysis of monetary policy meetings Philip Maier; 11. Institutional rules and the conduct of monetary policy: does a central bank need governing principles? Pierre L. Siklos; Data and econometric specification; Empirical evidence; Conclusions.