Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/102668
Authors: 
Hellwig, Martin
Year of Publication: 
2014
Series/Report no.: 
Preprints of the Max Planck Institute for Research on Collective Goods 2014/9
Abstract: 
The paper gives an overview over issues concerning the role of financial stability in monetary policy and the relation between banking supervision and central banking. Following a brief account of developments in the European Monetary Union since its creation, the systematic treatment contains four parts, first a systematic discussion of how a central bank´s operations differ from those of an administrative authority; second, a discussion of how the shift from convertible currencies to paper currencies has affected our understanding of monetary policy and the role of financial stability; third, a discussion of moral hazard in banking and banking supervision as a threat to monetary dominance and to the effective independence of central bank decision making in an environment in which financial stability is an essential precondition for reaching the central bank´s macroeconomic objective, e.g. price stability; finally, a discussion of the challenges for institution design and policy, with special attention to developments in the euro area.
Subjects: 
banking supervision
financial stability
monetary policy
central banking
bank resolution
independence of central banks and supervisory authorities
JEL: 
G18
G28
E58
E44
E42
E51
E52
G33
H63
Document Type: 
Working Paper

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