A monetary-structural reform to guarantee financial stability

Sergio Rossi

Chapter 1 in Central Banking, Monetary Policy and Financial In/Stability, 2025, pp 5-17 from Edward Elgar Publishing

Abstract: This chapter explains the theoretical factors inducing central banks to ignore the issue of financial stability until the global financial crisis burst in 2008. In so doing, our analysis also points out that, in fact, central banks contributed to increasing financial instability – as a result of monetarism as well as financial liberalization and deregulation. This is the reason why monetary policies must be largely reconsidered, in light, notably, of money's endogeneity, which is the hallmark of any banking systems. Hence, the last section puts forward a monetary–structural reform proposal to make sure that the banking sector will not be in a position to inflate further credit bubbles, which central banks cannot impede with the so-called macroprudential policies that have been put into practice since 2008.

Keywords: Financial crises; Money and banking; Payment systems (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035302147
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