Central Banks’ Contribution to Financial Instability

Sergio Rossi ()
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Sergio Rossi: University of Fribourg, Switzerland

Bulletin of Political Economy, 2020, vol. 14, issue 2, 203-217

Abstract: Financial stability has been a largely-debated issue since the bursting of the global financial crisis in 2008. Central banks seem to have discovered that price stability on the market for produced goods and services is not enough to avoid financial instability through monetary policy interventions. This paper explains that, in fact, both pre- and postcrisis interventions by monetary authorities have been contributing to inflate asset prices, thereby increasing in various ways the level of financial instability and fragility of the economy as a whole. This paper puts forward a monetary–structural reform to eradicate this problem definitively.

Keywords: bank money; financial crises; monetary policy (search for similar items in EconPapers)
JEL-codes: E42 E52 E58 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:awu:journl:v:14:y:2020:i:2:p:203-217

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