A payment system encompasses a set of instruments and means generally acceptable in making payments; the institutional and organizational framework governing such payments, including prudential regulation; and the operating procedures and communications network used to initiate and transmit payment information from payer to payee and to settle payments. This book, by Omotunde E.G. Johnson, with Richard K. Abrams, Jean-Marc Destresse, Tony Lybek, Nicholas Roberts, and Mark Swinburne, identifies main policy and strategic issues in payment system reform, describes the structure of payment systems in selected countries, highlights areas of consensus, and suggests the direction for future policy analysis.
to assure the private sector that adequate liquidity (that is, base money) will be
supplied by the central banks to the economy as a whole to guarantee a level of
operational efficiency of the system no less than what would be attained under a
...
Alex Cukierman is well known for his work on central bank behavior. This book brings together a large body of Cukierman's research and integrates it with recent developments in the political economy of monetary policy. Filled with applications and carefully worked out technical detail, it provides a valuable comprehensive analysis of central bank decisions, of the various effects of policy on inflation, and of the feedback from inflationary expectations to policy choices. Cukierman uncovers and analyzes the reasons for positive inflation and rates of monetary expansion. He shows that the money supply, and therefore inflation, are not exogenous. They are influenced by interactions involving distributional considerations, private information, personal motives, and the political environment. This point of view makes it possible to identify the institutional, political, and other features of a country that may be conducive to inflationary environments. Cukierman presents new multidimensional evidence on both legal and actual central bank independence for a sample of up to 70 countries and uses it to investigate the interconnections between the distributions of inflation and of central bank independence. He takes up such issues as why some countries have more independent central banks than others and identifies reasons for the substantial cross country variation in seigniorage. He provides positive explanations for the tendency of central banks, like the US Federal Reserve, to smooth interest rates and to be secretive. Observing that it is likely that the European Economic Community will have a monetary union before the turn of the century, Cukierman applies the techniques of modern political economy to discuss the effect of this change on the commitment to price stability. The book includes simple and advanced materials as well as informal summaries of the major technical results. The introduction contains a modular guide for reading and teaching the material.
Aspects of Central Bank Independence and Their Impact on Policy Outcomes
and the Distribution of Inflation 18.1 Introduction There is a widespread feeling
among economists and other observers of monetary policy that the degree of ...
This book investigates to what extent the quality of eligible collateral is able to explain inflation. Addressing this question, hypotheses derived from the "Theory of Property Economics" by Heinsohn & Steiger are tested. Data are collected using a questionnaire, answered by central banks. An index of the quality of eligible collateral is constructed. Regression analyses are performed based on a sample of 62 countries for the period 1990 to 2003. A negative, robust and statistically significant correlation between inflation and the quality of eligible collateral is found. Central bank independence cannot contribute to the explanation of inflation. The result supports the theory of Heinsohn & Steiger: Securitisation of central bank lending is crucial for price stability.
22 Finally, Ize argues that central bank recapitalisations call for an extensive
policy debate.223 He develops a simple framework to assess central bank
capital adequacy and, using capital structure data for a broad sample of central
banks, ...
As economic advisor to the Bank of England for many years, C. A. E. Goodhart is uniquely positioned to assess the role of the central bank in the modern financial system. This book brings together twenty-one of his previously published articles dealing with the changing functions of central banks over time, recent efforts to maintain price stability, and debates over specific financial regulation proposals in the UK. Although the current day-to-day operations of central banks are subject to continuous comment and frequent criticism, their structural role within the economic system as a whole has generally been accepted without much question, despite several attempts by economists in recent decades to challenge the value of the institution. C. A. E. Goodhart brings his knowledge of both the theoretical arguments and the actual working of central banks to bear in these essays. Part I looks at the general purposes and functions of central banks within the financial system and their evolution over time. Part II concentrates on the current objectives and operations of central banks, and the maintenance of price stability in particular. Part III analyzes the broader issues of financial regulation.
9.1 EARLY HISTORICAL DEVELOPMENT When the first Central Banks were
founded, for example the Swedish Riksbank, the Bank of England, the Banque
de France, they were neither expected, nor intended, to perform the functions of a
...
The impending establishment of the European Central Bank (ECB) brings a dramatic transition: the introduction of a single European Community (EC) currency. The European Central Bank describes and analyses, from the perspective of the General Counsel of the Dutch Central Bank, the objectives and tasks entrusted to the ECB and the instruments with which the ECB has been endowed in order to carry out its responsibilities. In the context of this discussion of the institutional features of the ECB, the author: describes the structure of the European System of Central Banks (ESCB), of which the ECB is the nucleus; emphasises how the future European monetary authority is firmly rooted in the legal framework of European Community law; focuses on the institutional arrangements set out in the Treaty establishing the European Community (EC Treaty) and their effect on ECB practical functions; analyses the consequences of a monetary split between members of the monetary union and States remaining outside; and proposes solutions to the difficulties which such a division may entail for the functioning of the European Community. The structuring of EC monetary authority as a part of a community based on respect for the law forms a constant theme throughout The European Central Bank. This work's critical, in-depth analysis; its thought provoking conclusions and summaries of problematic issues; and its clear, grounded structure all make it a particularly useful, scholarly examination of an important development in European and international law.
Theoretical background a) Economic and legal writing In economic and
institutional writing the issue of central bank independence has been discussed
extensively2. It is argued that there is a positive correlation between the measure
in which ...
In recent years the Bank of Canada has made important changes in the way it conducts monetary policy. In particular, the bank has adopted explicit inflation targets and introduced significant changes to its operational framework designed to increase transparency and reduce market uncertainty. This paper examines the key issues associated with the recent changes in the Bank of Canada’s monetary policy framework and analyzes various indicators of central bank credibility.
9The response of the Bank of Canada to various types of shocks, higlighting the
role of central bank credibility, is discussed in Freedman (1996). The remainer of
this section roughly follows Freedman's arguments. 10Eika, Ericsson, and ...
A central bank must decide on the frequency with which it will conduct open market operations and the variability in short-term money market that it will allow. It is shown how the optimal operating procedure balances the value of attaining an immediate target and broadcasting the central bank’s intentions against the informational advantages to the central bank of allowing the free play of market forces to reveal more of the information available to market participants.
I. INTRODUCTION In almost all industrialized countries, the central bank
implements policy by setting a proximate operational target for short-term money
market interest rates and then using open market operations and other
instruments such ...
Covers the history of the Bank for International Settlements (BIS), from its founding in Basel in 1930 to the end of the Bretton Woods system in 1973, with a focus on cooperation among the main central banks for the stability and efficiency of the international monetary system.
From the outset, Norman had envisaged that the BIS would develop into a kind of
research centre for central bank cooperation. He wanted issues such as the gold
exchange standard, gold clearing, or foreign exchange clearing to be studied ...
'As an introduction to the complex issue of harmonization of legal and regulatory structure of the European financial system and Islamic finance, this is a useful and welcome volume. the ideas, insights and practical issues addressed in the informed papers that compose the book should be valuable for academics and students of finance, and to those who provide legal and financial services. the book will be helpful also to European regulators who have yet to appreciate the importance of Islamic finance and its potential contribution to financial globalization as well as to European economic growth.' - Abbas Mirakhor, Former Executive Director, International Monetary Fund, US
This timely book examines the authorization of ShariÕah-compliant intermediaries as either credit institutions or as investment companies in the European Union.
