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The interaction of monetary and financial tasks in different central bank structures

In: Central Banks and Supervisory Architecture in Europe

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  • Aerdt Houben
  • Jan Kakes
  • Annelie Petersen

Abstract

This article describes how the institutional set-up of monetary and financial tasks differs across Europe. It discusses how these policies interact and pros and cons of central bank involvement. A prominent central bank role improves operational synergies, oversight and policy coordination but may also involve conflicts of interests, concentration of power and reputation risk. Finally, this article presents some preliminary thoughts on the policy response to the COVID pandemic in 2020.

Suggested Citation

  • Aerdt Houben & Jan Kakes & Annelie Petersen, 2022. "The interaction of monetary and financial tasks in different central bank structures," Chapters, in: Robert Holzmann & Fernando Restoy (ed.), Central Banks and Supervisory Architecture in Europe, chapter 7, pages 71-82, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:21354_7
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    References listed on IDEAS

    as
    1. Aerdt Houben & Jan Kakes, 2013. "Financial imbalances and macroprudential policy in a currency union," DNB Occasional Studies 1105, Netherlands Central Bank, Research Department.
    2. Bats, Joost V. & Houben, Aerdt C.F.J., 2020. "Bank-based versus market-based financing: Implications for systemic risk," Journal of Banking & Finance, Elsevier, vol. 114(C).
    3. Svensson, Lars E.O., 2017. "Cost-benefit analysis of leaning against the wind," Journal of Monetary Economics, Elsevier, vol. 90(C), pages 193-213.
    4. Aerdt Houben & Rob Nijskens & Mark Teunissen, 2014. "Putting Macroprudential Policy to Work," DNB Occasional Studies 1207, Netherlands Central Bank, Research Department.
    5. Joost Bats & Jan Willem van den End & John Thoolen, 2018. "Revisiting the central bank's lender of last resort function," DNB Occasional Studies 1604, Netherlands Central Bank, Research Department.
    6. Claudio Borio & William R. White, 2003. "Whither monetary and financial stability : the implications of evolving policy regimes," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 131-211.
    7. Janko Cizel & Jon Frost & Aerdt Houben & Peter Wierts, 2019. "Effective Macroprudential Policy: Cross‐Sector Substitution from Price and Quantity Measures," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 51(5), pages 1209-1235, August.
    8. Claudio Borio, 2014. "Monetary policy and financial stability: what role in prevention and recovery?," BIS Working Papers 440, Bank for International Settlements.
    9. Christopher Kent & Philip Lowe, 1997. "Asset-price Bubbles and Monetary Policy," RBA Research Discussion Papers rdp9709, Reserve Bank of Australia.
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    More about this item

    Keywords

    Economics and Finance;

    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
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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