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16 posts on "Central Bank"

May 09, 2014

Crisis Chronicles: Central Bank Crisis Management during Wall Street’s First Crash (1792)

James Narron and David Skeie

As we observed in our last post on the Continental Currency Crisis, the finances of the United States remained chaotic through the 1780s as the young government moved to establish its credit. U.S. Congress was finally given the power of taxation in 1787 and, in 1789, Alexander Hamilton was appointed as the first Secretary of the Treasury. Hamilton moved quickly to begin paying off war debts and to establish a national bank—the Bank of the United States. But in 1791, a burst of financial speculation in subscription rights to shares in the new bank caused a tangential rally and fall in public debt securities prices. In this edition of Crisis Chronicles, we describe how Hamilton invented central bank crisis management techniques eight decades before Walter Bagehot described them in Lombard Street.

Continue reading "Crisis Chronicles: Central Bank Crisis Management during Wall Street’s First Crash (1792)" »

October 04, 2013

Historical Echoes: A Central Bank by Any Other Name Is Still . . .

Amy Farber

Perhaps you enjoy being read to out loud. Perhaps you enjoy being read to on subjects related to central banking. Perhaps you would enjoy being read the Wikipedia entries for central banks around the world. If so, and your reader was to read the following beginning sentences for central bank entries, you would hear:
The central bank of Trinidad and Tobago is the central bank of Trinidad and Tobago . . . . The central bank of Yemen is the central bank of Yemen . . . . The central bank of The Bahamas is the central bank of The Bahamas . . . . The central bank of Jordan is the central bank of Jordan . . .

Continue reading "Historical Echoes: A Central Bank by Any Other Name Is Still . . . " »

Posted by Blog Author at 7:00 AM in Central Bank, Historical Echoes | Permalink | Comments (0)

April 05, 2013

Historical Echoes: Central Bank and Paper Money Innovator Given Death Sentence for His Efforts

Amy Farber

In 1668, Johan Palmstruch, the head of Stockholm Banco, the precursor to the oldest central bank still operating today—the Swedish Riksbank—was charged and sentenced to death, according to Wikipedia and the Riksbank.

Continue reading "Historical Echoes: Central Bank and Paper Money Innovator Given Death Sentence for His Efforts" »

Posted by Blog Author at 7:00 AM in Central Bank, Historical Echoes | Permalink | Comments (0)

March 23, 2012

Just Released: Chairman Bernanke Returns to His Academic Roots

Argia M. Sbordone

Federal Reserve Chairman Ben Bernanke is back in the classroom this month to deliver a series of four lectures for undergraduate students at the George Washington School of Business in Washington, D.C. It’s a welcome reconnection with students for Chairman Bernanke, who joined the Federal Reserve System in 2002 after a long career as an economics professor at Stanford University and later at Princeton University. The lectures at the George Washington School are part of Bernanke’s ongoing effort to educate the public about the role played by the Federal Reserve during the recent financial crisis. The nature and the scope of these lectures allow the Chairman to draw upon his background as a scholar of the Great Depression and his experience at the helm of the U.S. central bank to put the financial crisis in a broader context. The Chairman will talk about the origins and mission of central banks, identify the lessons learned from previous financial crises, and describe how those lessons informed the Fed's decisions during the recent crisis.

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Posted by Blog Author at 7:00 AM in Central Bank, Education, Inflation, Monetary Policy, Recession | Permalink | Comments (2)

December 21, 2011

Central Bank Imbalances in the Euro Area

Matthew Higgins* and Thomas Klitgaard

The euro area sovereign debt crisis sparked an outflow of bank deposits from countries in the periphery to commercial banks in Germany and other core countries. The outflow highlighted a key aspect of the payments system linking national central banks in euro area countries. In particular, net outflows from private commercial banks in a given country are matched by credits to that county’s central bank, with those credits extended by central banks elsewhere in the euro area. In this post, we explain how the credits affected the adjustment pressures faced by countries in the euro area during the ongoing debt crisis.

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March 30, 2011

Why Do Central Banks Have Discount Windows?

João Santos and Stavros Peristiani

Though not literally a window any longer, the “discount window” refers to the facilities that central banks, acting as lender of last resort, use to provide liquidity to commercial banks. While the need for a discount window and lender of last resort has been debated, the basic rationale for their existence is that circumstances can arise, such as bank runs and panics, when even fundamentally sound banks cannot raise liquidity on short notice. Massive discount window borrowing in the immediate aftermath of the September 11 terrorist attack on the United States clearly illustrates the importance of a discount window even in a modern economy. In this post, we discuss the classical rationale for the discount window, some debate surrounding it, and the challenges that the “stigma” associated with borrowing at the discount window poses for the effectiveness of the discount window.

Continue reading "Why Do Central Banks Have Discount Windows?" »

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