The institutional rationale of central banking reconsidered

Pablo Paniagua ()
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Pablo Paniagua: King’s College London

Constitutional Political Economy, 2017, vol. 28, issue 3, No 2, 256 pages

Abstract: Abstract Based on Goodhart’s (1988) The Evolution of Central Banks, I examine both the theoretical arguments and the historical evidence that could sustain the case for the natural emergence of central banks. I criticize Goodhart’s theoretical claim that central banks evolve naturally, by showing that they are far from being uniquely capable of supplying essential banking services. I review historical evidence showing that Goodhart’s historical generalizations are inconsistent with the developments of the vast majority of central banks. History also shows that crucial banking services have tended to be successfully provided by other means, except when governments prevented their development. Finally, I consider whether central banks, if not essential, are at least preferable to alternative arrangements.

Keywords: Central banking; Clearinghouse; Clubs; Monetary institutions; Self-governance (search for similar items in EconPapers)
JEL-codes: E58 H1 H4 K2 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (3)

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DOI: 10.1007/s10602-016-9223-9

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