What is it about?
This paper highlights how the roles traditionally played by central banks has been impacted over the years - not only as a result of changes in the structures and systems of financial regulation and supervision, but also as a result of the impacts of the evolved and evolving financial environment and complex financial instruments, on traditional tools of monetary policy.
Featured Image
Why is it important?
This has important implications - not only from the perspective of central bank independence, but also as a result of growing involvement of other financial sectors, namely securities market regulators in the monitoring and regulation of data analytics, as well as privacy related issues - as recently evidenced by the introduction of the GDPR.
Perspectives
In order to facilitate the traditional and evolving roles of central banks, greater coordination with the insurance, securities sectors, is becoming more evident - particularly as a result of globalization and the rise of conglomerates. With an ever increasing presence of the digital economy and the realization that the digital economy cannot simply be ring fenced owing to its growing influence - as well as the fact that the digital economy is becoming the economy itself, the growth of e commerce trading platforms, rise in complex trading and derivative instruments requires collaboration from other sectors of this expanding and continuously dynamic economy. With particular reference to the crypto asset markets, this will also require the engagement of forensic accounting experts - particularly from the perspective of audit and digital analytics.
Prof Marianne Ojo
Northwestern University
Read the Original
This page is a summary of: The Changing Role of Central Banks and the Role of Competition in Financial Regulation during (and in the Aftermath of) the Financial Crisis, European Law Journal, July 2011, Wiley,
DOI: 10.1111/j.1468-0386.2011.00563.x.
You can read the full text:
Resources
Recovering From The Global Financial Crisis: Achieving Financial Stability In Times Of Uncertainty
Fiscal and Monetary Policy Objectives: The Essence of Narrowing the Scope of Inflation Targeting Theories that appear to suggest that absolute independence exists (i.e., “the theory that recognizes no limits on central bank independence, so long as the bank itself is reliably pre-committed to achieving price stability”), indeed, cannot be sustainable. A sufficient and appropriate degree of central bank independence is definitely necessary for the goal of achieving price stability. However, despite the levels of independence claimed to be enjoyed by several central banks, recent events indicate shifts in focus of monetary policy objectives by various central banks, notably, that of the Fed Reserve. The impact of political and government influences on central banks’ monetary policies has been evidenced from the recent financial crisis and in several jurisdictions………..
Fiscal and Monetary Policy Objectives: The Essence of Narrowing the Scope of Inflation Targeting
It may be inferred that central banks’ crucial roles in establishing a macroprudential framework provide the key to bridging the gap between macroeconomic policy and the regulation of individual financial institutions. This however, on its own, is insufficient—close collaboration and effective information sharing between central banks and regulatory authorities is paramount. Consequences of lack of close collaboration, coordination, and timely exchange of information between tripartite authorities, such as the relationship which exists between the United Kingdom’s Financial Services Authority (FSA), the Bank of England, and the Treasury, were witnessed during the Northern Rock Crisis. The Bank of England could not effectively perform its traditional role as lender of last resort for a limited time without such a role being made public.
Contributors
The following have contributed to this page
