Risks to central-bank independence

Central banking today faces a number of existential challenges. On the political side, and particularly after the financial crisis, the public has come to expect central banks to take on a dizzying array of responsibilities, some far beyond their power or remit. These include everything from enhance...

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Autor principal:	Rogoff, Kenneth S.
Formato:	Artículo
Lenguaje:	English
Publicado:	Banco Central de Chile 2021
Materias:	BANCOS CENTRALES AUTONOMÍA RIESGO (ECONOMÍA)
Acceso en línea:	https://hdl.handle.net/20.500.12580/6142
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spelling	oai-20.500.12580-61422021-10-19T18:01:19Z Risks to central-bank independence Rogoff, Kenneth S. BANCOS CENTRALES AUTONOMÍA RIESGO (ECONOMÍA) Central banking today faces a number of existential challenges. On the political side, and particularly after the financial crisis, the public has come to expect central banks to take on a dizzying array of responsibilities, some far beyond their power or remit. These include everything from enhanced financial regulation to quasi-fiscal policy to mitigating economic inequality. Some recent populist proposals appear to be based on the presumption that central banks can issue large quantities of bank reserves indefinitely without any long-term inflationary or tax consequences. On the technocratic side, many central banks struggle with the trend decline in global real interest rates that steepened notably in the aftermath of the financial crisis. This decline has, in many cases, left the monetary authorities with little space to cut policy interest rates in the event of steep recession, much less in a financial crisis, and trying to put the best public face possible on much weaker “alternative monetary instruments,” such as quantitative easing (QE). At the same time, the fact that many “alternative monetary instruments” are in fact forms of fiscal policy—that could be implemented just as well or even better by finance ministries—has made the challenge of preserving centralbank independence against strong political headwinds even harder. Central banking today faces a number of existential challenges. On the political side, and particularly after the financial crisis, the public has come to expect central banks to take on a dizzying array of responsibilities, some far beyond their power or remit. These include everything from enhanced financial regulation to quasi-fiscal policy to mitigating economic inequality. Some recent populist proposals appear to be based on the presumption that central banks can issue large quantities of bank reserves indefinitely without any long-term inflationary or tax consequences. On the technocratic side, many central banks struggle with the trend decline in global real interest rates that steepened notably in the aftermath of the financial crisis. This decline has, in many cases, left the monetary authorities with little space to cut policy interest rates in the event of steep recession, much less in a financial crisis, and trying to put the best public face possible on much weaker “alternative monetary instruments,” such as quantitative easing (QE). At the same time, the fact that many “alternative monetary instruments” are in fact forms of fiscal policy—that could be implemented just as well or even better by finance ministries—has made the challenge of preserving centralbank independence against strong political headwinds even harder. 2021-10-19T17:50:33Z 2021-10-19T17:50:33Z 2021-10 Artículo 978-956-7421-69-5 978-956-7421-70-1 (pdf) 0717-6686 https://hdl.handle.net/20.500.12580/6142 en Series on Central Banking Analysis and Economic Policies; no. 28 Serie Banca Central, análisis y políticas económicas; no. 28 Attribution-NonCommercial-NoDerivs 3.0 Chile http://creativecommons.org/licenses/by-nc-nd/3.0/cl/ .pdf Sección o Parte de un Documento p. 27-54 application/pdf Banco Central de Chile
institution	Banco Central
collection	Banco Central
language	English
topic	BANCOS CENTRALES AUTONOMÍA RIESGO (ECONOMÍA)
spellingShingle	BANCOS CENTRALES AUTONOMÍA RIESGO (ECONOMÍA) Rogoff, Kenneth S. Risks to central-bank independence
description	Central banking today faces a number of existential challenges. On the political side, and particularly after the financial crisis, the public has come to expect central banks to take on a dizzying array of responsibilities, some far beyond their power or remit. These include everything from enhanced financial regulation to quasi-fiscal policy to mitigating economic inequality. Some recent populist proposals appear to be based on the presumption that central banks can issue large quantities of bank reserves indefinitely without any long-term inflationary or tax consequences. On the technocratic side, many central banks struggle with the trend decline in global real interest rates that steepened notably in the aftermath of the financial crisis. This decline has, in many cases, left the monetary authorities with little space to cut policy interest rates in the event of steep recession, much less in a financial crisis, and trying to put the best public face possible on much weaker “alternative monetary instruments,” such as quantitative easing (QE). At the same time, the fact that many “alternative monetary instruments” are in fact forms of fiscal policy—that could be implemented just as well or even better by finance ministries—has made the challenge of preserving centralbank independence against strong political headwinds even harder.
format	Artículo
author	Rogoff, Kenneth S.
author_facet	Rogoff, Kenneth S.
author_sort	Rogoff, Kenneth S.
title	Risks to central-bank independence
title_short	Risks to central-bank independence
title_full	Risks to central-bank independence
title_fullStr	Risks to central-bank independence
title_full_unstemmed	Risks to central-bank independence
title_sort	risks to central-bank independence
publisher	Banco Central de Chile
publishDate	2021
url	https://hdl.handle.net/20.500.12580/6142
work_keys_str_mv	AT rogoffkenneths riskstocentralbankindependence
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Risks to central-bank independence

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