The Changing Fortunes of Central Banking

Understanding the changing role of central banks and their recent novel policies is essential for analysing many economic and financial issues, ranging from financial regulation and crisis, to exchange rate dynamics and regime changes, and QE and prolonged low interest rates. This book features contributions by the world's leading experts on central banking, providing in accessible essays a fascinating review of today's key issues for central banks. Luminaries including Stephen Cecchetti, Takatoshi Ito, Anil Kashyap, Mervyn King, Donald Kohn, Otmar Issing and Hyun Shin are joined by Charles Goodhart of the London School of Economics and Political Science, whose many achievements in the field of central banking are honoured as the inspiration for this book. The Changing Fortunes of Central Banking discusses the developing role of central banks in seeking monetary and financial stabilisation, while also giving suggestions for model strategies. This comprehensive review will appeal to central bankers, financial supervisors and academics.

Table of Contents:
1. Introduction and overview Philipp Hartmann, Haizhou Huang and Dirk Schoenmaker; Part I. Monetary Economics and Policy: 2. Money: how could economists do without it? Mervyn King; 3. Monetary control in the UK: the impossible dream? Forrest Capie and Geoffrey Wood; 4. Pristine and parsimonious policy: can central banks ever get back to it and why they should try Paul Tucker; 5. Central bank talk about future monetary policy: lessons from the crisis and beyond Donald Kohn; 6. Bank capital and monetary policy transmission Hyun Song Shin; 7. When are central banks more likely to target asset prices? Haizhou Huang; Part II. Financial Stability and Regulatory Policy: 8. The macroprudential toolkit Richard Berner; 9. Three cooks or three wise men? The interplay between monetary, macroprudential and microprudential policies in supporting financial stability José Viñals, Tommaso Mancini-Griffoli and Erlend Nier; 10. Liquidity, default and the interaction of financial stability and monetary policy Dimitrios Tsomocos, Udara Peiris and Alexandros Vardoulakis; 11. Systemic risk quantification for macroprudential stress testing Miguel Segoviano and Raphael Espinoza; 12. What binds? Interactions between bank capital and liquidity regulations Anil Kashyap and Stephen Cecchetti; 13. Is burden sharing needed for financial stability? Dirk Schoenmaker; Part III. Foreign Exchanges and International Architecture: 14. The case for (and requirements of) monetary unions Charles Wyplosz; 15. Machines versus humans: will human forex dealers become extinct? Takatoshi Ito; 16. The case for flexible exchange rates revisited Robert Aliber; 17. Cross-border banking and monetary independence: difficult partners Marcus Miller; 18. International liquidity Philipp Hartmann; Part IV. The Millennium Challenges of Central Banks: 19. Overburdened central banks – can independence survive? Ottmar Issing; 20. Central banks, national balance sheets and global balance Andrew Sheng; 21. Recognising the economy as a complex, adaptive system: implications for central banks William White; 22. The changing fortunes of central banking Charles Goodhart.

About the Author :
Philipp Hartmann is Deputy Director General of the research department at the European Central Bank, which he helped to build from its beginning. He is also a Fellow of the Centre for Economic Policy Research. He has published research on financial, monetary and international issues in several books and numerous journal articles, and he serves as an associate editor of the Journal of Financial Stability. His policy work has been published in many official reports and discussed in fora including the ECOFIN Council, the ECB Governing Council and the Basel Committee on Banking Supervision. Haizhou Huang is a Managing Director at the China International Capital Corporation. He is also a Special-Term Professor of Finance at both PBC School of Finance, Tsinghua University and Shanghai Advanced Institute of Finance. He has published in leading academic and policy journals, including American Economic Review, European Economic Review, the Journal of Monetary Economics and Review of Finance. Dirk Schoenmaker is Professor of Banking and Finance at the Rotterdam School of Management, Erasmus Universiteit Rotterdam, and a Senior Fellow at the Brussels-based think tank Bruegel. He is also a member of the Advisory Scientific Committee of the European Systemic Risk Board at the ECB and a Research Fellow at the Centre for European Policy Research (CEPR). He has published in the areas of central banking, financial supervision and stability, European financial integration and sustainable finance.

Review :
'The contributors to this book constitute an absolute 'who's who' of central banking and monetary economics. The various chapters present gems of wisdom and reflection from economists whose opinions and thinking have shaped the modern world of central banking. A must for all scholars of monetary policy making and a very useful source for reading lists.' Richard Baldwin, President, Centre of Economic Policy Research 'What are the major challenges facing central banks today? And what are the major concerns governments and the general public have about central banks? Just about any response to these questions is covered in this book. And one would expect no less from the prominent thinkers who gathered together for a conference honouring Charles Goodhart - a man who has spent his career leading our thinking on these issues and then putting it in practice setting monetary policy in the UK.' Kristin J. Forbes, Sloan School of Management, Massachusetts Institute of Technology 'This is an outstanding collection of papers covering the whole range of central bank activities. I recommend it to all who study monetary policy, exchange rates and financial stability.' Franklin Allen, Imperial College London 'This collection of top-notch academic and policy papers covers some key areas of central banking, an important subject of macroeconomic research and policy debate that has been enlightened by Professor Charles Goodhart's many years of pioneer work and ground-breaking contribution. This is a very important and timely publication.' Xiaochuan Zhou, Governor, The People's Bank of China 'To run a central bank and set the interest rate can seem to be a narrowly defined undertaking. This book shows the opposite. Central Banking is multifaceted with many different demands and objectives in a changing world. The various contributions give a good account of relevant central bank issues of today.' Stefan Ingves, Governor of Sveriges Riksbank 'The financial crisis rightly prompted a rethink of the role of central banks in the modern economy, showing that a healthy focus on price stability had become a dangerous distraction. In response, institutional structures have been reformed, with many governments delegating operational independence for financial policy to central banks, to go alongside their responsibilities for monetary policy. The authors of the essays in this collection have drawn on their deep and varied expertise to provide thoughtful and thought-provoking reflections on the new challenges that these increased responsibilities have brought, as well as those that are ever present.' Mark Carney, Governor of the Bank of England 'The essays in honour of Charles Goodhart offer a splendid demonstration of how seminal were and are the many contributions of this great professor and central banker. Issues related to central banking and its changing fortunes are analysed luminously, both from the academic and the policy maker standpoint. A remarkable and useful book inspired by a great mind.' Jean-Claude Trichet, President of JCT Conseil, Paris, Honorary Governor of Banque de France, and previously President, European Central Bank