Introduction

The decade of the 1970s has seen a major change in the role accorded to monetary policy in the developed countries of the western world. From the final breakdown of the gold standard in the 1930s, and continuing after the Second World War and throughout the 1950s and 1960s, most central banks implemented some form of credit policy. They targetted interest rates and imposed controls over the growth of certain categories of credit, such as bank loans, consumer credit and foreign lending. Broadly speaking these were years of economic stability—most countries experienced a low rate of inflation and a low level of unemployment. By contrast the ’70s have been a period of instability and uncertainty. All western countries have been affected by a high and varying rate of inflation, which has undermined business confidence, and by larger output fluctuations than characterised previous decades.1 In trying to bring this inflation under control, and to achieve greater stability in output growth one country after another has given up controlling interest rates and credit conditions and has adopted quantitative targets for the rate of growth of the money supply as the basis of its monetary policy. The conference on which this volume of papers is based was organised as an attempt to evaluate the experience of various countries in implementing this new form of monetary policy.