Financial Stability and Central Banks: A Global Perspective

Financial Stability and Central Banks: A Global Perspective

Financial Stability and Central Banks: A Global Perspective

Financial Stability and Central Banks: A Global Perspective


This book offers an overview of present day thought on the very topical subject of financial stability and central banking. The papers, written by leading researchers, provide a highly informed account of contemporary policy issues and explore the legal, regulatory, managerial and economic issues that affect central banks.


In June 2000 the Bank of England hosted its seventh Central Bank Governors’ Symposium. the monograph presented at this symposium and the discussion which followed form the basis for this book. Since the Bank of England’s 300th birthday celebrations in 1994, its annual Central Bank Governors’ Symposium has developed into a structured investigation of particular central banking topics. Our first two symposia looked at the history and nature of central banking, first in the industrialised countries and then in developing countries. Subsequent symposia have examined the implications of government borrowing for central banks, financial regulation, payment systems, and, in 1999, monetary policy frameworks in a global perspective. the full list of resulting publications is provided on page ii.

The 2000 symposium turned to financial stability and the role of central banks. I asked Professor Peter Sinclair, the new Director of the Bank of England’s Centre for Central Banking Studies to co-ordinate the project involving authors from the Bank and from academia.

The maintenance of financial stability is complementary to the pursuit of monetary and price stability and a principal concern of central banks the world over. Price stability is imperilled if the financial system is in crisis, and price instability will warp and threaten the stability of the financial system. So financial stability and price stability go hand in hand. You cannot really expect to have one without the other. Both are key ingredients for the economic confidence upon which investment, prosperity and growth depend.

One thing all central banks have in common is an interest in financial stability as a public policy objective, as a key factor influencing macroeconomic performance and the potential for systemic disturbances. But the precise institutional arrangements vary widely country by country, and are also changing rapidly in many cases. How is financial stability secured? There are numerous factors that affect it. the public authorities have a range of tools they can use to influence these structural factors and to address crises when they occur. Some of these factors and tools were explored and discussed during a research workshop and project at our

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