scholarly journals Central Banking in Modern Democracies: Private vs. Public Control

2019 ◽  
Vol 11 (2) ◽  
pp. 233-254
Author(s):  
Panagiotis Kotsios
Keyword(s):  
Central Bank ◽  
Interest Rates ◽  
Banking Sector ◽  
Central Banking ◽  
Global Finance ◽  
Bank Management ◽  
Long Run ◽  
The World ◽  
The Status ◽  
Private Banking

Central banks are among the most powerful institutions in the world: they are granted a legal monopoly in the issuance of money, set interest rates, monitor the banking sector and generally control a country’s money supply and monetary policy. Their decisions and actions affect directly or indirectly almost every economic activity on the planet. However, most of these institutions decide and act independently from government, they are managed by appointed rather than democratically-elected officials and these officials usually come from the private banking sector. These facts generate questions about the functionality of the system and its efficiency in managing global finance. The goal of this research is to investigate the status of central bank management and ownership across the world today, and examine both philosophically and ethically the arguments for and against central bank independence in modern democracies. The analysis concludes that modern democracies should reassess the structure of central banking and address methods and practices that could possibly jeopardize economic development and the effective functioning of democracy in the long run.

Fifteen Years of Central Banking in Honduras

1967 ◽  
Vol 9 (4) ◽  
pp. 488-506 ◽  
Author(s):  
Richard A. LaBarge ◽  
Frank Falero
Keyword(s):  
World War Ii ◽  
Central Bank ◽  
Interest Rates ◽  
Central Banking ◽  
Primary Sources ◽  
World War ◽  
Monetary Policies ◽  
The Public ◽  
History Of ◽  
Commercial Paper

The purpose of this paper is to draw together from primary sources the case history of formative policy years for the Central Bank of Honduras. This bank, like others formed throughout the underdeveloped world in the post-World War II era, was created in 1950 as a vehicle for stimulating economic growth. In retrospect over 186 months of operations this particular Central Bank has an unusually outstanding policy record—a record which argues forcefully for appropriate monetary policy as a stimulant to economic advance.The first meeting of Central Bank directors was held on May 31, 1950, for the purpose of establishing the major monetary policies under which the Bank would commence operations July 1. At that meeting the directors established a schedule of maximum interest rates to be charged by the public commercial banks and a schedule of rates at which eligible commercial paper of 12 months maturity or less could be rediscounted with the Central Bank.

scholarly journals Macroeconomic variables and banking sector development: Evidence from Nigeria

2020 ◽  
Vol 8 ◽  
pp. 288-301
Author(s):  
Ojo Johnson Adelakun ◽  
Babatunde Afolabi ◽  
Uwasejike B Abuh
Keyword(s):  
Interest Rates ◽  
Money Supply ◽  
Banking Sector ◽  
Time Series Data ◽  
Oil Price ◽  
Series Data ◽  
Macroeconomic Variables ◽  
Long Run ◽  
Banking Sector Development ◽  
Bound Test

The study assessed the relationship between Macroeconomic Variables and Development in the Nigerian Banking Sector using annual time series data. Models were specified using Ratio of Credits to Private Sector to Gross Domestic Product (GDP) as a proxy for Banking Sector Development. At the same time, GDP growth rate, Poverty, Exchange Rate, Oil Price, Poverty, Money Supply, Inflation, and Interest rates were the selected Macroeconomic Variables used in the study. Data used were sourced from the Statistical Bulletin of Central Bank of Nigeria (CBN) for various editions and estimated using ARDL Bound Test and Vector Error Correction Mechanism (VECM). The study found that there exists a long-run relationship between Macroeconomic Variables selected and Banking Sector Development. The VECM coefficients revealed that all variables except Interest Rates have negative effects on Banking Sector Development. The VECM (-1), which showed the speed of adjustment, was rightly signed and significant, indicating a long-run causality relationship running from macroeconomic variables to banking sector development. The Impulse response from restricted VAR revealed that Banking Sector responded to the Macroeconomic Variables of which GDPGR and INT were transmitting negatively to Banking Sector Development while others were transmitting positive impulses. However, the variance decomposition found that oil price, followed by GDPGR and poverty, caused more variation in Banking Sector Development. In contrast, inflation and money supply caused the least variation in Banking Sector Development. The study, therefore, concluded that selected Macroeconomic Variables have a significant long-run relationship with Banking Sector Development. It is therefore recommended, among others that, Macroeconomic indicators should be well monitored and controlled using macroeconomic instruments promptly since when they are well managed would lead to a better developed Banking Sector in Nigeria.

scholarly journals Central Banking and Crisis Management from the Perspective of Austrian Business Cycle Theory

2019 ◽  
pp. 550-584 ◽  
Author(s):  
Gunther Schnabl
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Interest Rates ◽  
Crisis Management ◽  
Growth Dynamics ◽  
Central Banking ◽  
Business Cycle Theory ◽  
Price Inflation ◽  
Austrian Business Cycle Theory ◽  
Austrian Business Cycle

This chapter analyzes the evolution and effects of central bank crisis management since the mid-1980s based on a Hayek-Mises-Wicksell overinvestment framework. It is shown that given that the traditional transmission mechanism between monetary policy and consumer price inflation has collapsed, asymmetric monetary policy crisis management implies a convergence of interest rates toward zero and a gradual expansion of central bank balance sheets. From a Wicksell-Hayek-Mises perspective, asymmetric central bank crisis management has contributed to financial market bubbles, decreasing marginal efficiency of investment, increasing income inequality, and declining growth dynamics. The economic policy implication is a slow but decisive exit from ultra-expansionary monetary policies.

Money and Credit in the New Keynesian Model

2014 ◽  
Vol 65 (3) ◽  
Author(s):  
Sven Offick ◽  
Hans-Werner Wohltmann
Keyword(s):  
Interest Rate ◽  
Central Bank ◽  
Interest Rates ◽  
Banking Sector ◽  
New Keynesian ◽  
Credit Channel ◽  
New Keynesian Model ◽  
Static Approximation ◽  
Keynesian Model ◽  
The Interest Rate

AbstractThis paper integrates a money and credit market into a static approximation of the baseline New Keynesian model based on a money-and-credit-in-the-utility approach, in which real balances and borrowing contribute to the household’s utility. In this framework, the central bank has no direct control over the interest rate on bonds. Instead, the central bank’s instrument variables are the monetary base and the refinancing rate, i. e. the rate at which the central bank provides loans to the banking sector. Our approach gives rise to a credit channel, in which current and expected future interest rates on the bond and loan market directly affect current goods demand. The credit channel amplifies the output effects of isolated monetary disturbances. Taking changes in private (inflation and interest rate) expectations into account, we find that - contrarily to BERNANKE and BLINDER (1988) - the credit channel may also dampen the output effects of monetary disturbances. The expansionary effects of a monetary expansion may be substantially diminished if the monetary disturbance is accompanied by a contractionary credit shock. In a dynamic version of our model, in which expectations are formed endogenously, we find that the credit channel amplifies output responses.

scholarly journals DOES BANKING SECTOR DEVELOPMENT HAVE ANY ASSOCIATION WITH ECONOMIC GROWTH AND INTEREST RATES IN PAKISTAN?

2019 ◽  
Vol IV (I) ◽  
pp. 100-107
Author(s):  
Muhammad Yusuf Amin ◽  
Syed Imran Khan ◽  
Noor Hassan
Keyword(s):  
Economic Growth ◽  
Interest Rates ◽  
Granger Causality ◽  
Banking Sector ◽  
Real Exchange Rates ◽  
Discount Rates ◽  
Causality Test ◽  
Bank Deposits ◽  
Long Run ◽  
Banking Sector Development

The study aims to examine the association between banking sector development, real exchange rates, inflation rates, federal discount rates, economic growth and bank deposits in Pakistan. The study employs Johansen co-integration method and Granger causality test. The empirical results confirm for the existence of a long run relationship between banking sector development and inflation, economic growth and federal discount rates. The results of Granger causality indicate that US interest rates affect the development of the Pakistani banking sector. This confirms the existence of spillover impact.

scholarly journals IMPACT OF WORK LIFE BALANCE ON EMPLOYEE JOB SATISFACTION IN PRIVATE BANKING SECTOR OF KARACHI

2011 ◽  
Vol 7 (2) ◽  
Author(s):  
Sobia Shujat ◽  
Keyword(s):  
Public Administration ◽  
Banking Sector ◽  
Good Governance ◽  
Work Life ◽  
Life Balance ◽  
Employee Job Satisfaction ◽  
The World ◽  
International Donor ◽  
Donor Agencies ◽  
Private Banking

In recent times the issues of good governance have received wide attention from the policymakers, researchers and the international donor agencies. The existence of the Ombudsman promotes good governance around the world by ensuring administrative accountability and transparency. The necessity for the office of Ombudsman has been felt in Bangladesh ever since its independence. Our constitution makers incorporated provision for Ombudsman in article 77 of the constitution of 1972. In 1980, the parliament in Bangladesh passed the Ombudsman Act in pursuance of article 77 of the constitution. The office, however, has not yet been established and the provisions of the act have remained as dead letters. As a result, we have so far from the good governance in public administration. This paper provides an analytical overview of the Ombudsman institution as a mechanism of good governance in Bangladesh.

Understanding the Role of Central Banks in the Financial System

2020 ◽  
pp. 40-64
Keyword(s):  
Central Bank ◽  
Interest Rates ◽  
Critical Role ◽  
Balance Sheet ◽  
Financial System ◽  
Central Banks ◽  
Central Banking ◽  
Historical Background ◽  
Monetary Policies

The main responsibility of the central banks is to implement monetary policies. In this framework, they define interest rates and the amount of the money in the financial system. Hence, it can be said that central banks have the critical role in the development of the financial system. Because of this situation, it is obvious that central banks should satisfy some requirements, such as independence, in order to contribute to the effectiveness of the financial systems. Parallel to this aspect, this chapter aims to understand the role of the central banks in the financial system. In this context, the purpose and historical background of the central banking are explained. In addition to this situation, the subject of the central bank independence is identified as well. In the final aspect, important accounts in the analytical balance sheet of the central bank are defined.

scholarly journals Monetary Policy, Financial Stability, and the Zero Lower Bound

2016 ◽  
Vol 106 (5) ◽  
pp. 39-42 ◽  
Author(s):  
Stanley Fischer
Keyword(s):  
Monetary Policy ◽  
Lower Bound ◽  
Interest Rates ◽  
Financial Stability ◽  
Central Banking ◽  
Zero Lower Bound ◽  
Short Term ◽  
Long Run ◽  
Nominal Interest Rates ◽  
Equilibrium Real Interest Rate

Much has happened in the world of central banking in the past decade. In this paper, I focus on three issues associated with the zero lower bound (ZLB) on short-term nominal interest rates and the nexus between monetary policy and financial stability: 1) whether we are moving toward a permanently lower long-run equilibrium real interest rate; 2) what steps can be taken to mitigate the constraints imposed by the ZLB; and 3) whether and how financial stability considerations should be incorporated in the conduct of monetary policy. These important topics deserve the attention of both academic and government professionals.

‘The Fetishes of So-Called International Bankers’: Central Bank Co-operation for the World Economic Conference, 1932–3

1992 ◽  
Vol 1 (3) ◽  
pp. 281-311 ◽  
Author(s):  
Patricia Clavin
Keyword(s):  
Central Bank ◽  
Exchange Rates ◽  
Central Banks ◽  
Central Banking ◽  
International Economy ◽  
Economic Policies ◽  
Economic Conference ◽  
The Great Depression ◽  
The World ◽  
World Economic

With his sharp denunciation of the ‘old fetishes of so-called international bankers’ for fixed exchange rates on the gold-exchange standard, President Franklin D. Roosevelt allegedly consigned the World Economic and Monetary Conference to failure.1The conference had been convened in June 1933 to tackle the crippling levels of ‘beggar-thy-neighbour’ economic policies which were strangling the international economy during the Great Depression; its brief was so appealing and its concerns so broad, that sixty-five nations came to London that summer. But from the outset of conference preparations, which began in the autumn of 1932, the issue of central banking co-operation was to highlight many of the difficulties which plagued not only co-operative central bank efforts to revive the international economy but also dilemmas which faced central banks in their relations with their domestic governments.

Ownership and Governance of Central Banks: Insights from the Italian Experience

2020 ◽  
Vol 17 (6) ◽  
pp. 619-656
Author(s):  
Piergiuseppe Spolaore
Keyword(s):  
Central Bank ◽  
Banking Sector ◽  
Central Banks ◽  
Central Banking ◽  
Historical Evolution ◽  
Conflicts Of Interests ◽  
Radical Reform ◽  
Italian Experience ◽  
Private Investors ◽  
Stock Corporation

Between the end of 2013 and the beginning of 2014, a radical reform of Banca d’Italia – the Italian central bank and banking supervisory authority – was enacted. It was the last chapter of an historical evolution, started in 1893 with its incorporation as a joint-stock-corporation under private law, whose result places the Italian system within the niche of countries that entail the participation of private investors to the ownership and governance of central banks. This article analyzes the relevant Italian regulation also by comparing it with other international experiences. While most of the debate on central banking independence focuses on independence from politics, this article explores another side of the problem, namely the risk of capture by the banking sector and of subsequent conflicts of interests.Said risk significantly increases when the central bank’s shareholders are private investors which elect some of its governing bodies and receive dividends out of its earnings. Since a central bank carries out monetary operations that generate seigniorage, the distribution of profits out of these earnings is a transfer of public value to the private sector. Such circumstances can create incentives for the owners to influence the central bank’s decisions, also according to the magnitude of the values at stake.

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