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From Bretton Woods to Inflation Targeting: Financial Change and Monetary Policy Evolution in Europe

In: Inflation Targeting in MENA Countries

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  • David Cobham

Abstract

At a time when developing and emerging countries are becoming more interested in adopting formal inflation targets, it may be useful to review the experience of developed countries, which have employed a variety of monetary frameworks on their journey from fixed exchange rates under the Bretton Woods system in the 1960s to formal or informal inflation targeting (IT) in the 2000s. While the financial and monetary systems of the US, the UK and Germany have long been highly developed on a number of dimensions, those of France and Italy were much closer even in the 1970s to those found in emerging and developing countries today, and had to undergo major transformations in line with the evolution of their monetary policy strategies. Their cases may therefore be of particular relevance to developing and emerging countries that are now moving in the same direction, and perhaps in particular to MENA countries whose pre-existing financial arrangements had much in common with French, and to a lesser extent Italian, financial mechanisms. This chapter charts the journey the developed countries have taken, with special reference to the financial infrastructure requirements — notably with respect to money and bond markets, and to central banks — and the changes in financial infrastructure in France and Italy that accompanied and underpinned the changes in their monetary policy strategies.

Suggested Citation

  • David Cobham, 2011. "From Bretton Woods to Inflation Targeting: Financial Change and Monetary Policy Evolution in Europe," Palgrave Macmillan Books, in: Mongi Boughzala & David Cobham (ed.), Inflation Targeting in MENA Countries, chapter 7, pages 171-192, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-31656-0_7
    DOI: 10.1057/9780230316560_7
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