Abstract:
Central bank cooperation depends on a few crucial parameters: the extent to
which central bankers agree on theory (end means relationships); the extent to
which they can agree on goals (social purpose); the capacity (technical and
institutional) to achieve their collective goals; and whether the broader
political environment facilitates or impedes cooperation. This article explores
these questions by first providing an overview of central banks and bankers.
Among the G-10 countries, central bankers are likely to share political
independence, relatively long term horizons, and (increasingly) academic
backgrounds. These conditions may be conducive to high levels of cooperation in
the future. Second, I explore the "easiest" form of cooperation
information sharing and conclude that this is an area in which central
bank cooperation will become increasingly routinised. Cooperation to address
global financial stability is a more difficult cooperative dilemma, with
tensions between the need for efficient regulatory management and the inclusion
of a broader range of cooperating institutions. In the area of exchange rate
and monetary policy coordination, consensus among the major exchange rate
authorities regarding the effectiveness of coordinated exchange market
interventions has withered, though this does not preclude a new consensus from
emerging in the future. One of the most significant challenges to central bank
cooperation in the future will be how to include rising monetary and financial
powers, particularly China, into the cooperative management of international
monetary conditions.
Keywords: central bank, cooperation, monetary and financial stability, Bank for
International Settlements, China