Central Banks as Sources of Financial Instability.
The current financial crisis has highlighted the utter dependence on contemporary central banks as instruments for assuring the continuous flow of credit after a financial bust and the capacity of such banks to make booms which make those busts possible. The theoretical treatment of central banking...
| Published in: | Independent Review Vol. 14; no. 4; pp. 485 - 497 |
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| Format: | Article |
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Independent Institute
Spring 2010
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| Online Access: | View this record in EBSCOhost |
| Summary: | The current financial crisis has highlighted the utter dependence on contemporary central banks as instruments for assuring the continuous flow of credit after a financial bust and the capacity of such banks to make booms which make those busts possible. The theoretical treatment of central banking puts almost complete emphasis on the stabilizing capacity of such banks, reflecting the normative nature of much theoretical work on the subject and the assumption that they succeed in limiting the effects of booms and busts. The writer challenges the conventional treatment of central banking by contending that banks are fundamentally destabilizing. |
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