Central banks and monetary policy in historical perspective

Esteban Pérez Caldentey and Matías Vernengo

Chapter 7 in The Elgar Companion to the Economies of Latin America and the Caribbean, 2025, pp 190-202 from Edward Elgar Publishing

Abstract: Monetary policy in Latin America has evolved in five different phases. The first phase is characterized by the establishment of the first central banks adhering to a gold standard. The second phase is marked by the abandonment of the gold standard and the adoption of discretionary, rather than rules-based, monetary policy. The third phase consists in the generalized adoption of developmental and inward industrialization goals by central banks. The fourth phase places price stability as the key overriding objective of monetary policy. The final phase focusses on the adoption of inflation targeting within an open economy context. The evolution of monetary policy in the region is closely related to developments in the external sector and the needs associated with integration into the global economy. The paper will emphasize the relative difficulties of insulating the region from external monetary and financial volatility and the limitations faced by monetary institutions in promoting economic development with price stability.

Keywords: Monetary Policy; Central Banks and Their Policies; Foreign Exchange; International Monetary System; International Financial Policy; Latin America (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035317196
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