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The Necessity of Central Bank’s Involvement in Ensuring the Financial Stability

Author

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  • Sâmbotin ªtefan

    („Vasile Alecsandri” University of Bacãu, Faculty of Economics)

  • Bucur Iulia Andreea

    („Vasile Alecsandri” University of Bacãu, Faculty of Economics)

Abstract

Central Bank is one of the most important actors of economic life. The policy that this institution leads is important both in relation to achieving different economic policy objectives (economic growth, unemployment rate, price stability, balance of payment equilibrium) and in relation to the policies pursued by other players on the macroeconomic stage (government, employers, trade unions, European and international institutions). As a monetary authority, Central Bank has as objectives the implementation of the monetary policy, prudential supervision and supervision of commercial banks. In the current financial crisis and its effects on the global economy, it is discussed more and more the issue that the Central Bank has to involve in ensuring financial stability. This paper proposes a logical analysis of theoretical and practical foundations which support the necessity of Central Bank involvement in order to ensure the financial stability, the reasons and limits of its actions.

Suggested Citation

  • Sâmbotin ªtefan & Bucur Iulia Andreea, 2011. "The Necessity of Central Bank’s Involvement in Ensuring the Financial Stability," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 1181-1185, May.
    • Handle: RePEc:ovi:oviste:v:xi:y:2011:i:9:p:1181-1185
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    More about this item

    Keywords

    global financial crisis; price stability; financial stability; monetary stability; macroeconomic balance; prudential supervision; risk management; monetary policy objective;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G01 - Financial Economics - - General - - - Financial Crises

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