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Future Monetary Policy: Improved Monitoring and Internationally Coordinated

March 4, 2013

The Main Results of the Global Economic Symposium Now Published as Global Economic Solutions

Central Banks should improve the monitoring using a variety of presumptive macro-prudential indicators and broaden their view on monetary aggregates. Macroprudential instruments could be imposed to prevent excessive risk taking in the financial sector.

In times of crises, central banks can act as a “fire service” through their tools of liquidity management and unconventional monetary instruments. In some cases these interventions are necessary to prevent a collapse of the payment system and maintain financial stability. These measures should have a temporary nature, however. Central banks should not permanently prevent necessary economic adjustment after a crisis. A longer lasting financing of insolvent market participants may threaten central banks’ primary goal of maintaining price stability.

Further, there should be a world monetary authority that would require central banks to act more multilaterally. The Bank for International Settlements could be developed into a world monetary authority that would assess and coordinate important monetary decisions and unconventional monetary measures.

These are some of the main solutions proposed at the Global Economic Symposium (GES) 2012 and that have now been published in the Global Economic Solutions 2012/2013.

They were proposed by a group of experts and decision makers, among whom were Charles Goodhart, professor emeritus at the London School of Economics, the Argentinian economist Pablo E. Guidotti, and the Brazilian economist Carlos G. Langoni, and they pick up on such current discussions as the discussions held at this year’s annual meeting of the American Economic Association (San Diego, 4–6 January). Stanford economist John Taylor also called for more and better coordination among central banks at ( ).

These renowned experts emphasized that is it especially important for central banks to take immediate action in times of systemic crises to preserve financial stability. They also emphasized that central banks’ main priority should be to maintain monetary stability in the medium term. They should act as “fire fighters” by, for example, providing short-term liquidity during crises. But their main priority should always be to maintain monetary stability.


Global Economic Solutions 2012/2013



The Global Economic Symposium (GES) 2012 was being jointly organized by the Kiel Institute for the World Economy (IfW) and the Bertelsmann Stiftung, in cooperation with the German National Library of Economics – Leibniz Information Centre for Economics (ZBW) and in collaboration with the Fundação Getulio Vargas (FGV). The GES 2013 will be held on October 1–2, 2013 in Kiel/Germany.

Visit the official GES-blog at

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