scholarly journals Central bank and the monetary commitment

2004 ◽  
Vol 44 (160) ◽  
pp. 91-106
Author(s):  
Miomir Jaksic
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Macroeconomic Policy ◽  
Central Bank Independence ◽  
Macroeconomic Stabilization ◽  
Vital Importance ◽  
Monetary Regime ◽  
Policy Credibility ◽  
Monetary Rules

The central bank as the key monetary institution has to assure monetary policy credibility, which is of vital importance in the process of macroeconomic stabilization. The author analyses the concepts of central bank independence and accountability as a basis for successful macroeconomic policy, and the concept of monetary commitment which is of essential importance for monetary regime and formulation of monetary rules.

scholarly journals Outline of the Evolution of the Hungarian Monetary Policy from the Restoration of the Two-level Banking System to the Present Day

2021 ◽  
Vol 6 (1) ◽  
pp. 103-116
Author(s):  
Csaba Lentner
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Financial Stability ◽  
Banking System ◽  
Second Phase ◽  
Third Phase ◽  
Monetary Regime ◽  
New Type ◽  
Real Essence ◽  
Different Characteristics

This study outlines the development of Hungary’s monetary policy, and the course and changes in its objectives and instruments since the beginning of the market economy transition in the late 1980s. The author’s basic thesis is that the period since the two-level banking system was reinstated after four decades of a planned economy system, in 1987, can be basically divided into three development phases with significantly different characteristics. The first phase was an ‘attempt to introduce’ an imported monetary mechanism, or perhaps an urge to comply with it, while the second phase was an approach of a monetary regime change launched in 2013 and supporting economic growth and financial stability strongly and directly, which lasted until the appearance of the traumatic elements of the Covid-19 pandemic crisis. The third phase is evolving today, under the circumstances of adapting to the conditions of the real essence of the twenty-first century, i.e. a new type of international competitiveness, which is pursued by the Central Bank of Hungary as stipulated by the Fundamental Law and the cardinal Central Bank Act of Hungary.

Does Central Bank Independence in Arab Oil Exporters Matter?

2019 ◽  
pp. 119-148 ◽  
Author(s):  
Hoda Selim
Keyword(s):  
Central Bank ◽  
Oil Prices ◽  
Macroeconomic Policy ◽  
Executive Branch ◽  
Central Banks ◽  
Institutional Arrangements ◽  
Central Bank Independence ◽  
Policy Outcomes ◽  
Policy Performance ◽  
Weak Institutions

This chapter shows that central banks in Arab oil exporters are not independent. Low independence reflects institutional arrangements that allow the executive branch to influence, interfere, even dominate central bank operations. In a context of weak institutions, central bank independence (CBI) has not always mattered for macroeconomic policy outcomes. Gulf Cooperation Council (GCC) central banks delivered a better macroeconomic policy performance than those of the populous group because the credible peg discouraged discretion. Soft peg arrangements in the populous economies, in a context of weak institutions and discretionary policymaking and no de facto independent central bank, led to disappointing monetary policy outcomes. As oil exporters adapt to a new normal of low oil prices, the sustainability of fixed exchange rate regimes may not be guaranteed without sound macroeconomic institutions. Stronger institutions and effective accountability mechanisms are needed to insulate central banks from political pressures. In the short term, a rules-based framework could help.

scholarly journals Monetary Policy in Turkey after Central Bank Independence

2015 ◽  
Author(s):  
Refet S. Gürkaynak ◽  
Zeynep Kantur ◽  
M. Anıl Taş ◽  
Seçil Yıldırım
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Central Bank Independence

scholarly journals Warehousing: A Historical Lesson in Central Bank Independence

2017 ◽  
pp. 1-4 ◽  
Author(s):  
Owen F. Humpage
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Foreign Exchange ◽  
Federal Reserve ◽  
Institutional Arrangement ◽  
Central Bank Independence ◽  
The Us ◽  
Foreign Exchange Exposure

This Economic Commentary explains how warehousing—a seemingly innocuous institutional arrangement between the Federal Reserve and the US Treasury—came to threaten the Fed’s independence. Warehousing began as an arcane procedure designed to help the Treasury cover a specific type of foreign-exchange exposure. It then grew into a supplemental source of funding for the Treasury's foreign-exchange interventions. Eventually the procedure morphed into a sizeable off-budget source of funding for other Treasury activities and seemed an inappropriate subversion of the congressional appropriations process, a development that raised concerns within the Fed about its ability to conduct monetary policy free from political concerns.

scholarly journals Central Bank Credibility, Independence, and Monetary Policy

2018 ◽  
Vol 7 (3) ◽  
pp. 91-110 ◽  
Author(s):  
Abdelkader Aguir
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Emerging Economies ◽  
Inflation Targeting ◽  
Central Bank Independence ◽  
Inflation Target ◽  
Central Bank Credibility

Abstract The main motives behind the adoption of an inflation targeting regime largely relate to the notion of credibility, transparency of monetary policy and the autonomy of the central bank, which explicitly undertakes to achieve a certain inflation target. This paper examines the effects of inflation targeting in emerging economies in relation to the degree of independence of the central bank and the credibility of monetary policy. We find effects in emerging economies with little central bank independence, so our findings suggest that the central bank’s credibility, transparency and independence is a prerequisite for emerging economies to experience a decline in inflation following the adoption of inflation targeting.

The Bank of Japan: Central Bank Independence and the Politicization of Monetary Policy

2021 ◽  
Author(s):  
Gene Park
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Prime Minister ◽  
Central Bank Independence ◽  
Executive Power ◽  
Theoretical Justification ◽  
Electoral Incentives ◽  
Economic Stagnation ◽  
Bank Of Japan ◽  
The Government

In April 1998, the Bank of Japan (BOJ) gained legal independence. While the primary theoretical justification was to enhance the central bank’s inflation-fighting credibility, the newly independent BOJ immediately confronted a different and unexpected problem: a long and persistent deflation. As the government battled economic stagnation, debates over the extent to which the BOJ should prioritize overcoming deflation and the policies that should be employed to this end led to a profound politicization of monetary policy. This culminated in the Prime Minister Abe’s landslide electoral victory at the end of 2012 in which he campaigned on overcoming deflation, and then, once in power, effectively took over control of a previously intransigent BOJ Policy Board to reflate the economy. The democratic electoral process paved the way for a reassertion of control over the still legally independent central bank. From a wider perspective, these developments reflect broader changes in Japanese democracy: the greater influence of electoral incentives on policy and the centralization of executive power.

Partisan and Electoral Motivations and the Choice of Monetary Institutions Under Fully Mobile Capital

2002 ◽  
Vol 56 (4) ◽  
pp. 725-749 ◽  
Author(s):  
William Roberts Clark
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Exchange Rates ◽  
Central Bank Independence ◽  
Time Inconsistency ◽  
Social Planner ◽  
Fixed Exchange Rates ◽  
Mobile Capital ◽  
Wide Range ◽  
Institutional Solution

Central bank independence and pegged exchange rates have each been viewed as solutions to the inflationary bias resulting from the time inconsistency of discretionary monetary policy. While it is obvious that a benevolent social planner would opt for such an institutional solution, it is less obvious that a real-world incumbent facing short-term partisan or electoral pressures would do so. In this article, I model the choice of monetary institutions from the standpoint of a survival-maximizing incumbent. It turns out that a wide range of survival-maximizing incumbents do best by forfeiting control over monetary policy. While political pressures do not, in general, discourage monetary commitments, they can influence the choice between fixed exchange rates and central bank independence. I highlight the importance of viewing fiscal policy and monetary policy as substitutes and identify the conditions under which survival-maximizing incumbents will view fixed exchange rates and central bank independence as substitutes. In so doing, I provide a framework for integrating other contributions to this volume.

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