Monetary Law Blog

The Political Fight for an Independent Central Bank

THE BALANCE OF POWER; The Political Fight for an Independent Central Bank, 1790 - present
By Tim Todd

Directors often question the nature of the role and relationships between the political elements of the Federal Reserve and its independence. This volume was created to help Federal Reserve Bank directors who are responsible for the governance of their Districts and the guardianship of the Federal Reserve System.

International coordination between central banks

Remarks by Masaaki Shirakawa, Governor of the Bank of Japan, at the Symposium Sponsored by the Federal Reserve Bank of Kansas City, Jackson Hole, Wyoming, August 22, 2009 (International Policy Response to Financial Crises)

Credit transfer & direct debit schemes--EU consultation documents

The Eurosystem, which comprises the European Central Bank (ECB) and the 16 national central banks of the euro area, has published the documents entitled “Draft oversight framework for credit transfer schemes” and “Draft oversight framework for direct debit schemes” for public consultation.

The aim of these documents is to provide oversight frameworks for credit transfer and direct debit schemes in the context of the Single Euro Payments Area (SEPA), an initiative that will enable customers to make cashless euro payments to anyone located anywhere in the euro area, using only a single bank account and a single set of payment instruments.

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Payment, Clearing and Settlement Supervision in the US

In the USA draft legislation on payment, clearing and settlement supervision is under consideration.

Fact Sheet: US Legislative Reform

"The Administration today will deliver proposed legislation to Capitol Hill that would address an important source of regulatory arbitrage by creating a National Bank Supervisor and consolidating two federal bank regulators. Over the past two years, the financial system has been threatened by the failure or near failure of some of the largest and most interconnected financial firms. The federal government's ability to deal with these events was severely complicated by the lack of a statutory framework for avoiding the disorderly failure of a nonbank financial firm. That is why the legislation that the Administration will deliver today would also establish a resolution authority for the largest and most interconnected firms to help ensure that the federal government does not, in the future, have to choose between bailouts and financial collapse." Read further …

"Continuing its push to establish new rules of the road and make the financial system more fair for consumers and investors, the Administration today delivered proposed legislation to Capitol Hill that would require strong, consolidated supervision and regulation for all financial firms. The legislation also provides a regulatory regime to monitor, mitigate, and respond to risks in the financial system. Tomorrow the administration will release additional legislative language to create a National Bank Supervisor through the consolidation of the Office of Thrift Supervision and the Office of the Comptroller of the Currency, and to provide the government the tools it needs to adequately respond to a financial crisis." Read further …

An assessment of financial sector rescue programmes

A joint BIS and Banca d'Italia report on the wide array of rescue programmes adopted in several countries, following Lehman Brothers’ default in September 2008, in order to support banks and other financial institutions.

The report first provides an overview of the programmes, comparing their characteristics, magnitudes and participation rates across countries. Then, the authors consider the effects of the programmes on banks’ risk and valuation, looking at the behaviour of CDS premia and stock prices. Subsequently, the authors proceed to analyse the issuance of government guaranteed bonds by banks, examining their impact on banks’ funding and highlighting undesired effects and distortions. Finally, the report briefly reviews the recent evolution of bank lending to the private sector.

The authors draw policy implications, in particular as regards the way of mitigating the distortions implied by such programmes and the need for an exit strategy.