Central Bank Monopolies and Money Issuance
AbstractThe article deals with the role of the central banks in advanced market economies and the theoretical possibility of abolishing these institutions. Central banks have monopolies in some areas, especially regarding monetary policy. In many countries, central banks also have monopolies in other areas, for example in the payment and clearing transactions for banks and the state. In the context of the financial crises, there have been calls for the abolition of central banks and the restoration of money fully-backed by gold and issued by different subjects. The main reasoning behind these requests is connected with the accusation that central banks have been the basic culprits in the current crisis, because of their monopoly of the issuing money. This argument fails to recognize that central banks do not have a monopoly in issuing money as the dominant share of the money creation is attached with the process of multiplication of demand deposits by commercial banks. Restoration of the money backed by gold is furthermore completely unrealistic. The article discusses the shortage of gold stock as one of many reasons why gold is not suitable for monetary purposes.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by University of Economics, Prague in its journal Politická ekonomie.
Volume (Year): 2009 (2009)
Issue (Month): 5 ()
Postal: Redakce Politické ekonomie, Vysoká škola ekonomická, nám. W. Churchilla 4, 130 67 Praha 3
Find related papers by JEL classification:
- E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
- G2 - Financial Economics - - Financial Institutions and Services
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Stephen G. Cecchetti & Stefan Krause, 2002. "Central bank structure, policy efficiency, and macroeconomic performance: exploring empirical relationships," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 47-60.
- Edward J. Green, 2003. "Economic perspective on the political history of the Second Bank of the United States," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q I, pages 59-67.
- Ricardo de O. Cavalcanti & Neil Wallace, 1999.
"Inside and outside money as alternative media of exchange,"
Federal Reserve Bank of Cleveland, pages 443-468.
- Cavalcanti, Ricardo de O & Wallace, Neil, 1999. "Inside and Outside Money as Alternative Media of Exchange," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 31(3), pages 443-57, August.
- Frederick H. Schultz, 2005. "The changing role of the Federal Reserve," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 343-348.
- William T. Gavin, 2009. "More money: understanding recent changes in the monetary base," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 49-60.
- Anna J. Schwartz, 2005. "Aftermath of the monetarist clash with the federal reserve before and during the Volcker era," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 349-352.
- Robert D. Laurent, 1994. "Is there a role for gold in monetary policy?," Economic Perspectives, Federal Reserve Bank of Chicago, issue Mar, pages 2-14.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Vaclav Subrta).
If references are entirely missing, you can add them using this form.