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The crash of 2008 revealed that the world's central banks had failed to offset the financial imbalances that led to the crisis, and lacked the tools to respond effectively. What lessons should central banks learn from the experience, and how, in a global financial system, should cooperation between them be enhanced? Banking on the Future provides a fascinating insider's look into how central banks have evolved and why they are critical to the functioning of market economies. The book asks whether, in light of the recent economic fallout, the central banking model needs radical reform.
Supported by interviews with leading central bankers from around the world, and informed by the latest academic research, Banking on the Future considers such current issues as the place of asset prices and credit growth in anti-inflation policy, the appropriate role for central banks in banking supervision, the ways in which central banks provide liquidity to markets, the efficiency and cost-effectiveness of central banks, the culture and individuals working in these institutions, as well as the particular issues facing emerging markets and Islamic finance. Howard Davies and David Green set out detailed policy recommendations, including a reformulation of monetary policy, better metrics for financial stability, closer links with regulators, and a stronger emphasis on international cooperation.
Exploring a crucial sector of the global economic system, Banking on the Future offers new ideas for restoring financial strength to the foundations of central banking.
"[T]he depth of its analysis will make Banking on the Future an important source of insights for years to come."--Ed Crooks, Financial Times
"The best assessment yet of the role played by the leading western central banks--the U.S. Federal Reserve, the ECB and the Bank of England--in the run-up to the financial crisis and beyond, from two former insiders at the top level of UK policymaker."--Financial Times (FT Critics Pick 2010)
"Buy the book with confidence."--Jane Fuller, Financial World
"Books on central banking usually vie with pills as sleep inducers, but Banking on the Future: The Fall and Rise of Central Banking is actually a page-turner."--Andrew Allentuck, National Post
"In this forensic and engaging overview, Susan Hough presents a frank, entertaining and personal review of the history of ideas, practice, personalities and experience in the science of earthquake prediction. Although Hough is a respected scientist, she takes a journalist's viewpoint here, not shying away from legitimate criticism of those she regards as friends, and taking on the credulous at the edge of, or even beyond, the mainstream scientific."--Ian Main, Times Higher Education
"[A] valuable, accessible volume. . . . This clear, nontechnical guide on the present and future of central banking from two eminent policy makers could not have come at a better time."--Choice
"A better title for this book would have been: All You Ever Wanted to Know About Central Banking and More. . . . Davies and Green provide much to inform and interest diverse audiences. . . .[I]t's a book that practitioners and students of central banking need to have on their shelf."--Management Today
"We get an insider's view of the nuts and bolts of central banking, but not so inside that the authors are uncritical. They readily identify the pressure to change regulations or advice when regulators feel under pressure to display expertise in new issues. . . . These are snippets of insight that only critical insiders know how to capture."--Dick Bryan, Australian Review of Public Affairs
Posted January 4, 2011
Howard Davies and David Green share with their readers the lessons that they have drawn from their long career in central banking. Their main theme turns around the deep flaws that the credit crisis has revealed in the modus operandi of central banks and what to do about these flaws. To their credit, Messrs. Davies and Green make topics such as the structure and status of central banks, monetary policy, financial stability, and market operations and financial infrastructure, accessible to readers who are not directly involved into central banking. Messrs. Davies and Green make many comments on the Bank of England, the European Central Bank, and the U.S. Federal Reserve. Other central banks come into play only when their coverage is useful to better apprehend the workings of central banking worldwide. The chapter dedicated to central banking in the emerging markets is too general to be of much use to anyone interested in this topic. The main value of this book probably lies in the chapter about asset prices. Messrs. Davies and Green rightly denounce the passive attitude of central banks towards asset price bubbles. The authors quote Steve Roach on this subject: "The lack of monetary discipline has become the hallmark of an unfettered globalization. Central banks have failed to provide a stable underpinning to world financial markets and to an increasingly asset-dependent global economy . As the increasing prevalence of bubbles indicates, a failure to recognize the interplay between the state of asset markets and the real economy is an egregious policy error." Therefore, Mr. Roach calls for a shift away from "one-dimensional fixation on CPI-based inflation." Unfortunately, some central bankers apparently have not learned much from the recent past when they do not spare any efforts to re-inflate asset price bubbles such as housing and the financial markets. In summary, Messrs. Davies and Green succeed in their endeavor in making central banking accessible to an uninitiated audience eager to learn more about the impact of central banks' modus operandi on their (financial) well-being.Was this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.