Stabilising Capitalism, 1st ed. 2016 A Greater Role for Central Banks Palgrave Macmillan Studies in Banking and Financial Institutions Series

The role of central banks as a hinge on which the financial system rests has returned to the top of the political agenda in recent years. The global financial crisis has resulted in many changes for central banks, including renewed power in financial supervision and reduced restrictions in their implementation of monetary policies. This book argues that central banks play a key role in financial systems, presenting the European Central Bank as a specific example of an institution that uses its uniquely independent position and wide margins of discretion to provide an array of important functions. It illustrates how central banks promote the security and efficiency of payment systems, pursue price stability, and accommodate the optimal utilization of the resources, labour and capital available to an economy. Stabilising Capitalism demonstrates how these institutions also aid in dealing with the risk of financial collapse and permit the continuity of public expenditure when the government is unable to place securities in the bond market. The author concludes by suggesting that although many consider the idea of this role for central banks to be outdated, these institutions form the root of the capitalist market economy and act as a bastion against financial instability.

Preface
Acknowledgements
1. The roots of central banking
2. Tendencies
3. Rigour and flexibility
4. Discretion, not rules
5. The temporary re-emergence of rules
6. The crisis of 2008
7. Regulatory shortcomings, supervisory shortcomings
8. A return to central banking
9. Bagehot and beyond
10. Discretion, not arbitrariness
11. The protection of independence and discretion
12. Concluding remarks
Notes
References
Index of names

Pierluigi Ciocca was head of market operations and economic research for the Bank of Italy and Deputy Director General of the Bank from 1995 to 2006. He is a member of Accademia dei Lincei and editor of the journal Rivista di Storia Economica, founded in 1936 by Luigi Einaudi.