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An explanation of the domestic consequences of recent changes in the global economy.
Essay from the year 2011 in the subject Economics - Finance, grade: 1,0 (80%), University of Warwick (Politics and International Studies), course: Politics of Global Finance, language: English, abstract: Historical developments during recent economic history have demonstrated a remarkably parallel development of international capital mobility (ICM) and central bank independence (CBI), making both fundamental factors of today's monetary system. Neoliberal economic models depict the anti-inflationary credibility associated with CBI as the outcome of strict market rules, insulating policy from political control. The structural power of mobile capital subsequently forced governments to adopt it as policy. However, the theoretical assumptions underlying these arguments misrepresent current realities and obscure the fact that credibility is a social phenomenon. Looking at CBI as a social institution shows that it facilitates a consensus between current political and market interests. For financial market actors, CBI functions as a guide for their intersubjective expectations and ensures the continuity of the current economic order with the financial markets at its centre. Governments consciously support the embedding of society within these markets, while shielding themselves from the reputational costs of adverse market outcomes. Within this consensus, substantial indirect state control over policy decisions remains. Consequently, CBI's central importance does not lie in anti-inflationary credibility derived from the removal of political control, but in its institutional role as a link between political and market interests in contemporary financial governance.
Essay from the year 2011 in the subject Economics - Finance, grade: 1,0 (80%), University of Warwick (Politics and International Studies), course: Politics of Global Finance, language: English, abstract: Historical developments during recent economic history have demonstrated a remarkably parallel development of international capital mobility (ICM) and central bank independence (CBI), making both fundamental factors of today’s monetary system. Neoliberal economic models depict the anti-inflationary credibility associated with CBI as the outcome of strict market rules, insulating policy from political control. The structural power of mobile capital subsequently forced governments to adopt it as policy. However, the theoretical assumptions underlying these arguments misrepresent current realities and obscure the fact that credibility is a social phenomenon. Looking at CBI as a social institution shows that it facilitates a consensus between current political and market interests. For financial market actors, CBI functions as a guide for their intersubjective expectations and ensures the continuity of the current economic order with the financial markets at its centre. Governments consciously support the embedding of society within these markets, while shielding themselves from the reputational costs of adverse market outcomes. Within this consensus, substantial indirect state control over policy decisions remains. Consequently, CBI’s central importance does not lie in anti-inflationary credibility derived from the removal of political control, but in its institutional role as a link between political and market interests in contemporary financial governance.
Provides an in-depth overview of the Federal Reserve System, including information about monetary policy and the economy, the Federal Reserve in the international sphere, supervision and regulation, consumer and community affairs and services offered by Reserve Banks. Contains several appendixes, including a brief explanation of Federal Reserve regulations, a glossary of terms, and a list of additional publications.
Not long ago, secrecy was the byword in central banking circles, but now the unmistakable trend is towards greater openness and transparency. This, the third Geneva Report on the World Economy, describes and evaluates some of the changes in how central banks talk to the markets, to the press, and to the public. The report first assesses the case for transparency ? defined as providing sufficient information for the public to understand the policy regime ? and concludes that it is very strong, based on both policy effectiveness and democratic accountability. It then examines what should be the content of communication and argues that central banks ought to spell out their long-run objectives and methods. It then investigates the link between the decision-making process and central bank communication, drawing a distinction between individualistic and collegial committees. The report concludes with a review of the communications strategies of some of the main central banks.
Central Banks should enjoy a fair degree of autonomy in pursuing price stability to promote long-run growth and prosperity. This volume, edited by Patrick Downes and Reza Vaez-Zadeh, contains the papers presented at the fifth IMF seminar on central banking issues in November 1990. The theme was the interdependence of central bank functions and the role of central bank autonomy.
Recent changes in technology, along with the opening up of many regions previously closed to investment, have led to explosive growth in the international movement of capital. Flows from foreign direct investment and debt and equity financing can bring countries substantial gains by augmenting local savings and by improving technology and incentives. Investing companies acquire market access, lower cost inputs, and opportunities for profitable introductions of production methods in the countries where they invest. But, as was underscored recently by the economic and financial crises in several Asian countries, capital flows can also bring risks. Although there is no simple explanation of the currency crisis in Asia, it is clear that fixed exchange rates and chronic deficits increased the likelihood of a breakdown. Similarly, during the 1970s, the United States and other industrial countries loaned OPEC surpluses to borrowers in Latin America. But when the U.S. Federal Reserve raised interest rates to control soaring inflation, the result was a widespread debt moratorium in Latin America as many countries throughout the region struggled to pay the high interest on their foreign loans. International Capital Flows contains recent work by eminent scholars and practitioners on the experience of capital flows to Latin America, Asia, and eastern Europe. These papers discuss the role of banks, equity markets, and foreign direct investment in international capital flows, and the risks that investors and others face with these transactions. By focusing on capital flows' productivity and determinants, and the policy issues they raise, this collection is a valuable resource for economists, policymakers, and financial market participants.
In 1978, China embarked on a gradual but far-reaching reform of its economic system. This paper focuses on the achievements so far in reforming the financial sector, the legal framework for financial transactions, the payments system, and the monetary policy and foreign exchange system. It also analyzes the tasks ahead to achieve the goals set in these areas for the year 2000.