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Central banks and competition authorities: institutional comparisons and new concerns

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  • John Vickers

Abstract

The establishment of independent authorities for monetary policy and for competition policy was part of the institutional consensus of the Great Moderation. The paper contrasts how policy has operated in the two spheres, especially as regards the role of law. It then discusses the application of competition policy to banks before and during the crisis, and relationships between competition and financial stability. Finally, the paper considers whether the financial crisis - which has led, at least temporarily, to unorthodox and less independent monetary and competition policies - has undermined the long-term case for independence. The conclusion is that it has not. While regulation of the financial system clearly requires fundamental reform, sound money and markets free from threats to competition remain fundamental to long-run prosperity; those ends are best pursued by focused and independent monetary and competition policies.

Suggested Citation

  • John Vickers, 2010. "Central banks and competition authorities: institutional comparisons and new concerns," BIS Working Papers 331, Bank for International Settlements.
    • Handle: RePEc:bis:biswps:331
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    References listed on IDEAS

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    1. Jean-Charles Rochet & Xavier Vives, 2004. "Coordination Failures and the Lender of Last Resort: Was Bagehot Right After All?," Journal of the European Economic Association, MIT Press, vol. 2(6), pages 1116-1147, December.
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    4. Kevin C. Murdock & Thomas F. Hellmann & Joseph E. Stiglitz, 2000. "Liberalization, Moral Hazard in Banking, and Prudential Regulation: Are Capital Requirements Enough?," American Economic Review, American Economic Association, vol. 90(1), pages 147-165, March.
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    Cited by:

    1. Budzinski, Oliver & Monostori, Katalin & Pannicke, Julia, 2012. "Der Schutz geistiger Eigentumsrechte in der Welthandelsorganisation: Urheberrechte im TRIPS Abkommen und die digitale Herausforderung," Ilmenau Economics Discussion Papers 79, Ilmenau University of Technology, Institute of Economics.
    2. Franco Bruni, 2011. "Europe and the World’s Economy Governance: The Monetary and Financial Perspective," Chapters, in: Carlo Secchi & Antonio Villafranca (ed.), Global Governance and the Role of the EU, chapter 1, Edward Elgar Publishing.
    3. Budzinski, Oliver & Haji Ali Beigi, Maryam, 2013. "Competition policy agendas for industrializing countries," Ilmenau Economics Discussion Papers 81, Ilmenau University of Technology, Institute of Economics.
    4. Budzinski, Oliver, 2012. "Würde eine unabhängige europäische Wettbewerbsbehörde eine bessere Wettbewerbspolitik machen?," Ilmenau Economics Discussion Papers 78, Ilmenau University of Technology, Institute of Economics.
    5. Stenbacka, Rune & Takalo, Tuomas, 2019. "Switching costs and financial stability," Journal of Financial Stability, Elsevier, vol. 41(C), pages 14-24.
    6. Claudio Borio, 2019. "Central banking in challenging times," BIS Working Papers 829, Bank for International Settlements.
    7. Labib Shami, 2025. "Elusive competition: impact of non-bank credit providers’ financing on credit market competition," Journal of Banking Regulation, Palgrave Macmillan, vol. 26(2), pages 288-303, June.
    8. Mr. Lev Ratnovski, 2013. "Competition Policy for Modern Banks," IMF Working Papers 2013/126, International Monetary Fund.

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