What do we really know about the long-term evolution of central banking? Evidence from the past, insights for the present

Stefano Ugolini

No 2011/15, Working Paper from Norges Bank

Abstract: The ongoing financial crisis is shaking central bankers’ certainties about their mission, and a rethinking of such mission can greatly benefit from a non-finalistic reassessment of how central banking has evolved over the centuries. This paper does so by taking a functional, instead of an institutional approach. The survey covers the provision of both microeconomic (financial stability) and macroeconomic (monetary stability) central banking functions in the West since the Middle Ages. The existence of a number of important trends (some unidirectional, some cyclical) is underlined. The findings have implications for the current debate on the institutional design of central banking, both in the U.S. and in the eurozone. Historical evidence suggests that neither changes in the organizational model of central banks nor government deficit monetization should necessarily be seen as evil; what is crucial to the success of any solution, is that the institutional agreement backing the existence of money-issuing organizations must be credible. The appendix provides a case study on Norway.

Keywords: Central banking; monetary policy; financial stability; institutional design (search for similar items in EconPapers)
JEL-codes: E42 E50 G21 N10 N20 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2011-11-21
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:bno:worpap:2011_15

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