Why do central banks attempt to cooperate with other central banks? Why should those political systems (in practice, in the advanced modern industrial world, democratic states), to whom ultimately the central banks are accountable, accept a cooperative strategy of the central banks? What overall gain do they expect to achieve? The answers clearly depend on the definition of the fundamental tasks of central banks, and thus on how cooperation might be envisaged as a tool in the accomplishment of those goals. The purposes and functions of central banks, however, have changed dramatically over the course of time, in accordance with the changing international monetary system from the gold standard, through the Bretton Woods system to the post-1973 order, including European monetary integration. This chapter reviews the pattern, motivation, and record of central bank cooperation in the broader international context of debate about macroeconomic cooperation from the nineteenth century onwards.
A Model of the International Monetary System*
