Why was the emergence of modern central banking slow? Flashcards
1
Q
Why was the emergence of modern central banking slow?
A
- Early confusion the
role of CB - no clear understanding of their broader role - Distrust of power - wary of giving too much control to a single institution
- Limited
understanding of
Economic Cycles
and FC - economic theories less developed in 18/19th century, so little push to create institutions that could handle financial crises or downturns - Impact of FC and
Interwar Period - highlighted need for CBs as LOLR, helped govs realise CBs needed more power to manage crises - Influence of GS - MP restricted under GS as they need to maintain a fixed ER - this reduced role of CB
