The New Monetary Regime: Introduction

Perhaps the most striking feature of macroeconomic policy of the past twenty or thirty years has been the emergence of a consensus that monetary policy should be delegated to an independent authority. The world has moved from a situation in the 1960s and 1970s where there were very few independent central banks — in Europe the main example was the Bundesbank of course — to one now where independence is almost standard. Indeed with the foundation of the European Central Bank and the eurosystem the Bundesbank model has effectively come to dominate European monetary policy. The collection of papers in this issue of the Review consider this move in policy setting from a number of diverse perspectives including the move to inflation targeting as well as central bank independence. They assess the effectiveness of this move, describing how an independent monetary authority actually does operate, as well as how it might utilise information more effectively