Adventures with coordinated statements, central banking edition
If six different central banks coordinate a big liquidity operation, you end up with six different press releases, from the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Swiss National Bank, and the Federal Reserve.
All of them start the same way, talking about how they’re coordinating action, cutting the interest rate on their liquidity operations by 50bp, and agreeing to provide such operations in each others’ currencies, in future, should that become necessary. Think of it as a holiday greetings card from the banks to the market.
And then, underneath the “happy holidays” boilerplate, each individual central bank adds a little personalized note about itself. Here’s how the ECB describes what it’s going to do: ...
More
Comment: Central banking is not the solution, neither any of the formulas. Indeed, given the current structure, it is doubtful whether rules at all are better than discretion. What is needed is a depolitiziced sytem - something in the lines of a gold-based free banking system.
All of them start the same way, talking about how they’re coordinating action, cutting the interest rate on their liquidity operations by 50bp, and agreeing to provide such operations in each others’ currencies, in future, should that become necessary. Think of it as a holiday greetings card from the banks to the market.
And then, underneath the “happy holidays” boilerplate, each individual central bank adds a little personalized note about itself. Here’s how the ECB describes what it’s going to do: ...
More
Comment: Central banking is not the solution, neither any of the formulas. Indeed, given the current structure, it is doubtful whether rules at all are better than discretion. What is needed is a depolitiziced sytem - something in the lines of a gold-based free banking system.
No comments:
Post a Comment