Should the Functions of Monetary Policy and Banking Supervision Be Separated?

Charles Goodhart and Dirk Schoenmaker

Oxford Economic Papers, 1995, vol. 47, issue 4, 539-60

Abstract: The paper investigates whether monetary policy and banking supervision should be separated. The main argument for separation is that the combination of functions might lead to a conflict of interest. An argument against is that separation is inconsistent with the central bank's concern for the systemic stability of the financial system. In a cross-country survey of 104 bank failures, we observe a trend towards using taxpayers' money for bank rescues which strengthens the case for hiving off the supervisory function to a government agency. It would, however, be difficult to have a complete division, since the central bank generally remains the only source of immediate funding. Copyright 1995 by Royal Economic Society.

Date: 1995
References: Add references at CitEc
Citations: View citations in EconPapers (206)

Downloads: (external link)
http://links.jstor.org/sici?sici=0030-7653%2819951 ... 0.CO%3B2-M&origin=bc full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:oxecpp:v:47:y:1995:i:4:p:539-60

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

Oxford Economic Papers is currently edited by James Forder and Francis J. Teal

More articles in Oxford Economic Papers from Oxford University Press Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK.
Bibliographic data for series maintained by Oxford University Press ().