CENTRAL BANKS: FROM POLITICALLY INDEPENDENT TO MARKET-DEPENDENT INSTITUTIONS |
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Authors: | Pedro Schwartz Juan Castañeda |
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Institution: | Faculty of Economics, Universidad San Pablo CEU in Madrid; Universidad Nacional de Educación a Distancia (UNED) in Madrid |
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Abstract: | Responses to the financial crisis are undermining the Chinese walls painfully built between monetary and fiscal authorities. Central banks and state treasuries are working side by side as lenders of last resort. Central banks are helping economic ministers with purchases of public debt and discounting of private paper. Regulation and control of financial institutions is now a political football. Central banks must be seen again as market-dependent institutions in a world of currency competition. Privatisation in law or in fact is back on the table. |
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Keywords: | Central bank privatisation central bank independence monetary stability lender of last resort |
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