CONTENTS
List of figures vi
List of tables vii
Foreword viii
Acknowledgements x
1 INTRODUCTION 1
2 PRICE STABILITY, MONETARY EXPANSION
AND OUTPUT GROWTH
12
Box A Inflation and growth: the statistical relationship for the
BoE group
15
Box B Monetary growth and inflation: the relationship refined 20
3 THE CENTRAL BANK AND THE GOVERNMENT 24
Seigniorage 28
Financial repression 30
Foreign exchange operations 31
Stock and flow variables in the central bank’s
relationship with its government
32
A monetary policy reaction function 34
Box C Estimates of a monetary policy reaction function for the
BoE group by independence
35
4 CENTRAL BANKS’ EXTERNAL ACTIVITIES 40
Box D Estimates of a monetary policy reaction function for the
BoE group by exchange rate regime
46
5 THE CENTRAL BANK AND THE PRIVATE
SECTOR
49
The payments system 49
The banking system 51
Other financial markets 58
6 REGULATION AND SUPERVISION 71
7 THE STATUS OF THE CENTRAL BANK 80
The use of skilled staff by the central bank 80
The determinants of total staff numbers 85
Central bank independence 86
Central bank and government cooperation 94
8 CONCLUSION 98
APPENDIX 1 Central bank questionnaire 100
APPENDIX 2 Some macroeconomic and monetary characteristics of
the Bank of England group, 1979–93
105
APPENDIX 3 Alternative measures of per capita income in US
dollars
114
APPENDIX 4 116
Estimated seigniorage revenue in the Bank of England
group, 1979–93
116
Estimated seigniorage revenue/GDP in the Bank of
England group, 1979–93
118
Estimated seigniorage revenue/government revenue in
the Bank of England group, 1979–93
119
APPENDIX 5 Estimated revenue from financial repression in the
Bank of England group, 1979–93
121
SYMPOSIUM PROCEEDINGS
Minutes of symposium on central banking in developing
countries held at the Bank of England, 9 June 1995
125
Bibliography 140
Index 144