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Why Do Banks Need a Central Bank?

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Author Info
Goodhart, C A E
Abstract

The conventional view is that the joint provision of payments' services together with portfolio management functions by banks exposes the monetary system to contagious failure, which a Central Bank should prevent. The author argues, however, that the joint provision of payments' services and portfolio management could be safely conducted by mutual collective investment intermediaries without such Central Bank support, and that current technological changes are making this latter development more widespread. The vulnerability of banks lies, instead, primarily in the special nature of their assets, largely nonmarketable, fixed nominal-value loans of uncertain true worth. Copyright 1987 by Royal Economic Society.

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Article provided by Oxford University Press in its journal Oxford Economic Papers.

Volume (Year): 39 (1987)
Issue (Month): 1 (March)
Pages: 75-89
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Handle: RePEc:oup:oxecpp:v:39:y:1987:i:1:p:75-89

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  3. Richard W. Kopcke, 2000. "Deposit insurance, capital requirements, and financial stability," Working Papers 00-3, Federal Reserve Bank of Boston. [Downloadable!]
  4. Bertocco Giancarlo, 2004. "Are banks really special? A note on the theory of financial intermediaries," Economics and Quantitative Methods qf04021, Department of Economics, University of Insubria. [Downloadable!]
  5. Michael Berlemann & Kalin Hristov & Nikolay Nenovsky, 2002. "Lending of Last Resort, Moral Hazard and Twin Crises: Lessons from the Bulgarian Financial Crisis 1996/1997," William Davidson Institute Working Papers Series 464, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
  6. Gentil Corazza, 2001. "Os Bancos Centrais e sua ambivalência público-privada [Central Banks and their public-private nature]," Nova Economia, Economics Department, Universidade Federal de Minas Gerais (Brazil), vol. 11(1), pages 123-145, July. [Downloadable!]
  7. Gentil Corazza, 2001. "Os Bancos Centrais e sua Ambivalência Público-Privada," Anais do XXIX Encontro Nacional de Economia [Proceedings of the 29th Brazilian Economics Meeting] 011, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics]. [Downloadable!]
  8. Javier Suárez, 1998. "Risk-taking and the prudential regulation of banks," Investigaciones Economicas, Fundación SEPI, vol. 22(3), pages 307-336, September. [Downloadable!]
  9. Bertocco Giancarlo, 2006. "Finance and Development: is Schumpeter’s Analysis still relevant?," Economics and Quantitative Methods qf06011, Department of Economics, University of Insubria. [Downloadable!]
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  11. Michael D. Bordo & Anna J. Schwartz, 2000. "Measuring Real Economic Effects of Bailouts: Historical Perspectives on How Countries in Financial Distress Have Fared With and Without Bailouts," NBER Working Papers 7701, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  12. Khiaonarong, Tanai, 2003. "Payment systems efficiency, policy approaches, and the role of the central bank," Research Discussion Papers 1/2003, Bank of Finland. [Downloadable!]
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  14. Michael D. Bordo & Anna J. Schwartz, 2002. "Charles Goodhart's Contributions to the History of Monetary Institutions," NBER Working Papers 8717, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  17. Claudio E. V. Borio & Renato Filosa, 1994. "The changing borders of banking: trends and implications," BIS Working Papers 23, Bank for International Settlements. [Downloadable!]
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