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Symposium 2013

Solution for The Future of Central Banking and Financial Market Reform

The Challenge

The global financial crisis has revealed regulatory failure in financial markets and demonstrated the urgent need for reform. In particular, it is now widely accepted that in addition to established m ...

The global financial crisis has revealed regulatory failure in financial markets and demonstrated the urgent need for reform. In particular, it is now widely accepted that in addition to established microprudential policies, macroprudential policies aimed at increasing the stability of the financial sector as a whole are imperative. But an active debate has emerged over what role the central bank should play with this augmented set of policies.

Acknowledge the limitations of monetary policy

The bold and unconventional monetary policy measures that central banks were forced to use during the global financial crisis led the public to believe in the omnipotent central banker who will save the day no matter what happens to the economy. But monetary policy has clear limitations, which must be publicly acknowledged. Monetary policy cannot solve structural problems in the economy and it should not engage in financing public budgets. In addition, central banks must not engage in distributive measures because they lack the necessary democratic legitimacy.

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    Symposium 2013

    Macroprudential regulation should be located at central banks

    Macroprudential regulation should be located at central banks

    Macroprudential regulation should be located at central banks

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    Central banks should increase the transparency of their decision-making to deal with increased uncertainty and maintain their credibility

    Central banks should increase the transparency of their decision-making to deal with increased uncertainty and maintain their credibility

    Central banks should increase the transparency of their decision-making to deal with increased uncertainty and maintain their credibility

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    Unconventional policy measures such as quantitative easing should be communicated as temporary measures rather than a paradigm shift

    Unconventional policy measures such as quantitative easing should be communicated as temporary measures rather than a paradigm shift

    Unconventional policy measures such as quantitative easing should be communicated as temporary measures rather than a paradigm shift

    Polity, Academia, Business, Civil Society