Central Banking After the Crisis: No Return to Past Certainties

Turner, Adair

doi:10.1057/be.2015.19

Cited by 4 publications

(2 citation statements)

References 7 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…In the 1930s, the liquidationist approach gave the pretext for the lack of action by the Federal Reserve during several waves of banking crisis Cogley 1999, De Long 1990. In the 2000s, the trust in stable inflation as being a sufficient precondition to a stable economy (Alesina et al 2001) excused many central banks from taking a sufficiently decisive monetary policy tightening against the wave of unsustainable lending booms (Turner 2015). Similarly, due to the excessive trust in the new methods of measuring and managing risk, central banker, regulators and supervisors grossly underestimated the scale of the excessive risk taken by banks and other financial institutions (Bookstaber 2017;Gambacorta Shin 2016).…”

Section: Discussionmentioning

confidence: 99%

“…There is a substantial body of academic literature on QE's role in reducing the interest burden of public debt service by stabilizing long-term interest rates. However, only a handful of publications highlight that when central banks purchase treasury bonds to keep them permanently 6 , it in fact amounts to a conversion of these bonds into zero coupon perpetuities bearing no burden for the government (Paris, Wyplosz 2014, Turner 2015, Corsetti et al 2015.…”

Section: Credit and Money Creation During Balance-sheet Recessionsmentioning

confidence: 99%

See 1 more Smart Citation

The divergence between actual central banking and conventional economics

Sławiński¹

2019

Argumenta Oeconomica

View full text Add to dashboard Cite

Actual money creation and the conduct of monetary policy are in some respects at variance with what is assumed in mainstream economics. Nonetheless, in turbulent times central banks have tended to take decisions that followed the widely accepted best practice. The resulting consequences were very unfortunate on at least two occasions. In the early 1930s, the dominant liquidationist doctrine prevented the Federal Reserve from providing commercial banks with adequate liquidity to stop runs by depositors. In the 2000s, the belief that stable inflation is sufficient to keep the economy on an equilibrium growth path prevented central banks from hiking interest rates enough to stop unsustainable lending booms. In both cases the central banks' decisions were not questioned as they were in line with the prevailing beliefs of the day. Both experiences call for highlighting the divergences between how central banks are assumed to operate in mainstream economics and how they operate in practice. Identifying these divergences should improve the democratic accountability of central banks and provide inspiration for new advances in research.

show abstract

Section: Discussionmentioning

confidence: 99%

Section: Credit and Money Creation During Balance-sheet Recessionsmentioning

confidence: 99%

The divergence between actual central banking and conventional economics

Sławiński¹

2019

Argumenta Oeconomica

View full text Add to dashboard Cite

show abstract

The Financial Stability Board and Switzerland’s WiR-Credit Mechanism

Phillips

Desmoulins‐Lebeault

2019

Journal of Economic Issues

View full text Add to dashboard Cite

What Did Central Banks Learn from Financial Crises?

Sławiński

2021

Studies in Logic, Grammar and Rhetoric

View full text Add to dashboard Cite

During the global financial crisis (GFC) of 2007–2009 and the currentCovid-19 debacle, central banks acted quickly, boldly, and effectively. The paper argues that they did so thanks to the lessons learned from the past financial crises, which provided them with opportunities to reconsider their previous beliefs. A case in point is the banking crisis in the United States during the Great Depression of the 1930s that taught central banks to act rapidly and decisively in order to prevent an initial liquidity crisis from escalating into a solvency crisis leading to bankruptcies of banks with potentially disastrous consequences for the entire economy. The paper revisits the consequences of the currency crises of the 1990s, which transformed exchange rate regimes across the world: the EMS one of 1992–1993 that accelerated the launch of the euro, and the Asian one of 1997–1998 resulted in the proliferation of floating exchange rates in emerging economies.

show abstract

Central Banking After the Crisis: No Return to Past Certainties

Cited by 4 publications

References 7 publications

The divergence between actual central banking and conventional economics

The divergence between actual central banking and conventional economics

The Financial Stability Board and Switzerland’s WiR-Credit Mechanism

What Did Central Banks Learn from Financial Crises?

Contact Info

Product

Resources

About