The role of the central bank as a foundation on which the financial system rests has returned to the top of the political agenda in recent years. The global financial crisis has resulted in many changes for central banks, including renewed or extended responsabilities in financial supervision and reduced restrictions in the implementation of monetary policy.
This book explores the key role central banks play in the economy, using their uniquely independent position and wide margins of discretion to complete a number of important tasks. It illustrates how central banks pursue the security and efficiency of the payment system, price stability, and the optimal utilization of labour and capital.
Stabilising Capitalism emphasises how central banks manage the risk of financial collapse and, within limits, permit the continuity of public expenditure when the government is unable to place securities in the bond market. The author concludes by suggesting that although many consider several functions of central banks to be outdated, these institutions should remain the basis of the capitalist market economy. He advises that especially in the Euro area, they should be allowed to play an even greater role as a bastion against real and financial instability.