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The development of monetary policy in the 20th century – some reflections

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  • Otmar Issing

    (Center for Financial Studies, Frankfurt am Main)

Abstract

In this paper I outline – from a practitioner’s as well as from a researcher’s perspective – several of the key developments that took place during the last century in monetary policy. In particular, I describe how the monetary system evolved from gold standard, prevailing throughout most of the last century, to paper money and how the norm in central banking changed from pure discretion after World War II to transparency and independence. I furthermore analyze how the exchange rate regime under Bretton-Woods impacted on countries’ monetary policy and, with a focus on Europe, how European Monetary Union (EMU) emerged from the European Monetary System (EMS). I then outline today’s relatively broad consensus on monetary policy and how it developed from a learning process on the side of central banks and important contributions from research. Finally, after arguing that the ECB’s monetary policy which fruitfully combines past experience and current research is a successful and promising approach, I outline some challenges lying ahead

Suggested Citation

  • Otmar Issing, 2010. "The development of monetary policy in the 20th century – some reflections," Working Paper Research 186, National Bank of Belgium.
  • Handle: RePEc:nbb:reswpp:201004-01
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    File URL: https://www.nbb.be/doc/oc/repec/reswpp/wp186en.pdf
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    References listed on IDEAS

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    Cited by:

    1. Arina Wischnewsky & David‐Jan Jansen & Matthias Neuenkirch, 2021. "Financial stability and the Fed: Evidence from congressional hearings," Economic Inquiry, Western Economic Association International, vol. 59(3), pages 1192-1214, July.
    2. Issing, Otmar, 2012. "Central banks: Paradise lost," CFS Working Paper Series 2012/06, Center for Financial Studies (CFS).
    3. Otmar Issing, 2011. "Lessons for monetary policy: what should the consensus be?," Globalization Institute Working Papers 81, Federal Reserve Bank of Dallas.
    4. Otmar Issing, 2012. "Central Banks - Paradise Lost," IMES Discussion Paper Series 12-E-10, Institute for Monetary and Economic Studies, Bank of Japan.
    5. Mr. Otmar Issing, 2011. "Lessons for Monetary Policy: What Should the Consensus Be?," IMF Working Papers 2011/097, International Monetary Fund.

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    More about this item

    Keywords

    monetary policy; monetary system; European Monetary Union; ECB;
    All these keywords.

    JEL classification:

    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists
    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative

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