Issuing Financial Money of Ultimate Quality

2019 ◽  
pp. 30-82
Author(s):  
Ulrich Bindseil
Keyword(s):  
Central Bank ◽  
Large Scale ◽  
Central Banks ◽  
Central Banking ◽  
Theory And Practice ◽  
Financial Assets ◽  
Central Bank Money ◽  
Bank Money

The essence of central banking is the issuance of central bank money—being itself defined as dominant financial money used at a large scale for payments and being of the highest possible credit and liquidity quality amongst all financial assets, such that payment through it is accepted as settlement of any other financial claim. This chapter elaborates on the nature of central bank money and reviews the pre-1800 theory and practice of central bank money issuance. It is shown that the nature of central bank money and its benefits were well understood by early authors. Moreover, the 25 central banks that issued (or at least aimed at) issuing central bank money before 1800 are introduced. The types of central bank money (deposits, banknotes, certificates of deposits) are briefly reviewed.

Lender of Last Resort

2019 ◽  
pp. 136-154
Author(s):  
Ulrich Bindseil
Keyword(s):  
Central Bank ◽  
Financial Stability ◽  
Debt Crisis ◽  
Central Banks ◽  
Central Banking ◽  
Lender Of Last Resort ◽  
Central Bank Money ◽  
Bank Of England ◽  
European Debt Crisis ◽  
Bank Money

The recent central banking literature often argues that the LOLR function would be the key feature defining a ‘modern’ central bank. This chapter argues that this view may appear too radical (despite the enormous benefits of the LOLR) as the appearance of the LOLR does not change the nature of central banking (which is primarily associated with the issuance of central bank money). After providing an overview of the roles of central banks for financial stability, the chapter focuses on one early LOLR episode, namely the measures of the Hamburger Bank, Bank of Amsterdam and Bank of England in the European debt crisis of 1763. It is shown that in particular the Hamburger Bank acted as systemic lender of last resort, comparable to what modern central banks did in 2008.

Central Banking before 1800

2019 ◽  
Author(s):  
Ulrich Bindseil
Keyword(s):  
Central Bank ◽  
Central Banks ◽  
Central Banking ◽  
Natural Monopoly ◽  
European Continent ◽  
Central Bank Money ◽  
As Species ◽  
Policy Objectives ◽  
The 19Th Century ◽  
Bank Money

During the 20th century, a view established itself, according to which (a) defining central banking would be difficult, (b) the Sveriges Riksbank (established in 1668) and the Bank of England (established in 1694) would have been the first central banks, (c) although at that time central banks did not have a policy mandate and no concept of central banking would have existed before the 19th century. This book challenges these views and rehabilitates pre-1800 central banking, including the role of numerous other institutions, mainly on the European continent. Central banking should be defined as being associated with the issuance of “central bank money”, i.e. financial money of the highest possible credit quality, that is accepted for settlement of any other financial claim in the same way as species money is accepted as it is considered credit, liquidity and market risk free, to use modern terminology. Issuing central bank money is a natural monopoly, and therefore central banks were always based on public charters regulating them and giving them a unique role in a sovereign territorial entity. Many early central banks were not only based on a public charter but were also publicly owned and managed, and had well defined policy objectives. The book reviews these policy objectives and the financial operations of 25 central banks established before 1800. The book shows that many of the central bank controversies debated today actually date back to the period 1400-1800.

Central Banking without Central Bank Money

1999 ◽  
Vol 99 (92) ◽  
pp. 1 ◽  
Author(s):  
Alain Ize ◽  
Arto Kovanen ◽  
Timo Henckel ◽  
◽  
◽  
...  
Keyword(s):  
Central Bank ◽  
Central Banking ◽  
Central Bank Money ◽  
Bank Money

Central Banking Without Central Bank Money

1999 ◽  
Author(s):  
Timo Henckel ◽  
Alain Ize ◽  
Arto Kovanen
Keyword(s):  
Central Bank ◽  
Central Banking ◽  
Central Bank Money ◽  
Bank Money

scholarly journals Digital Euro: A (Digital) Symbol of Progress and Integration in Europe

2021 ◽  
Vol 9 (1) ◽  
pp. 74-82
Author(s):  
Camelia Ignatescu ◽  
Raluca Onufreiciuc
Keyword(s):  
Central Bank ◽  
Central Banks ◽  
Bank Deposits ◽  
Distributed Ledger ◽  
Distributed Ledger Technology ◽  
Central Bank Money ◽  
If Current ◽  
Bank Money ◽  
Digital Assets ◽  
Digital Symbol

The emergence of crypto assets such as Bitcoin and Ether exposed a number of advantages that these digital assets based on distributed ledger technology (DLTs) can offer. As cash is becoming less and less popular in the eurozone, the European Central Bank (ECB) is currently looking at the scenario of creating a digital euro as a kind of central bank money that may be used by the general public. DLT may be used to tokenize central bank money via digital currencies (CBDCs) issued by central banks, as well as to digitally represent bank deposits. The purpose of this article is to analyse what are the solutions for the future digitization of the monetary and financial systems and if current CBDC projects and prototypes, including those by the Chinese and Swedish central banks and the attempts of the ECB, have the chance to succeed with or without DLT.

scholarly journals On the money creation approach to banking

2021 ◽  
Author(s):  
Salomon Faure ◽  
Hans Gersbach
Keyword(s):  
Monetary Policy ◽  
Commercial Banks ◽  
Central Banks ◽  
Capital Regulation ◽  
Bank Deposits ◽  
Central Bank Money ◽  
Money Creation ◽  
Asset Purchases ◽  
Bank Equity ◽  
Bank Money

AbstractWe study today’s two-tier money creation and destruction system: Commercial banks create bank deposits (privately created money) through loans to firms or asset purchases from the private sector. Bank deposits are destroyed when households buy bank equity or when firms repay loans. Central banks create electronic central bank money (publicly created money or reserves) through loans to commercial banks. In a simple general equilibrium setting, we show that symmetric equilibria yield the first-best level of money creation and lending when prices are flexible, regardless of monetary policy and capital regulation. When prices are rigid, we identify the circumstances in which money creation is excessive or breaks down and the ones in which an adequate combination of monetary policy and capital regulation can restore efficiency. Finally, we provide a series of extensions and generalizations of the results.

scholarly journals Central Bank Independence, Transparency and Accountability Indexes: a Survey

2014 ◽  
Vol 7 (1) ◽  
pp. 35-54 ◽  
Author(s):  
Florin Cornel Dumiter
Keyword(s):  
Central Bank ◽  
Central Banks ◽  
Central Banking ◽  
Central Bank Independence ◽  
Advantages And Disadvantages ◽  
Aggregate Index ◽  
Central Bank Transparency ◽  
Considerable Impact ◽  
High Degree ◽  
Transparency And Accountability

Abstract Recently, the remarkable trend upon central bank independence and the efficient monetary policy were seriously highlighted in the monetary economics field. Starting from 1990s’ central bank independence was at the core of policy making and central banking problems, because of the widespread economical, political, personal and budgetary autonomy of the central bank. Nowadays, we can observe an increasing trend upon central bank transparency, for evaluating more accurate the central bank’s performances by the wide public, mass-media and financial markets. Consequently, a central bank must encompass a high degree of accountability and responsibility, because of the final liability in case of failure. In this paper we present, analyze and assess the construction of the most important indices regarding central bank independence, transparency and accountability in a chronological manner, presenting also the advantages and disadvantages of these indices related to actual practices of central banks. Moreover, we analyze the analytical results of the empirical testing of these indices with a considerable impact upon the developed and developing country group. In regard with the empirical results of different authors, we suggest the importance and the necessity for constructing an aggregate index for measuring central bank independence, transparency and accountability, based on de jure stipulations and the actual practices of the central banks.

The Over-Burdened Central Bank and the Shift Away from Autonomy

2017 ◽  
Author(s):  
Pierre L. Siklos
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Financial Stability ◽  
Central Banks ◽  
Central Banking ◽  
Forward Guidance ◽  
Self Assessments ◽  
Crisis Conditions ◽  
Central Bankers ◽  
Influence Behavior

Many central banks took on additional responsibilities. Inadequate self-assessments remain unfinished almost a decade after the crisis erupted. Government-central bank relationships need to be conditioned on whether times are normal versus crisis conditions. Transparency confronts ambiguity when central banks must communicate the outlook and the conditionality of their decisions. Forward guidance was taken too far and ended up being futile. Central bankers simply exhausted their ability to influence behavior through mere words or ambiguous statements. This is a self-inflicted wound for institutions that are seen as overburdened. These forces leave central banking more vulnerable than is commonly acknowledged. Squaring the conventional objectives of monetary policy with the unclear aims of financial stability is difficult. Adequate limitations on the authority of central banks have yet to be thoroughly debated. We are nowhere near resolving the inherent tensions between old and new sets of central bank objectives.

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