During the Central Banking Seminar, participants meet in small discussion groups
to review timely central banking policy issues.
Each year, participants review selected recommended readings
in advance of the Seminar. In the discussion groups, participants
review the issue from the perspective of their individual
country's monetary policy framework and experience. At
the close of the Seminar, the discussion groups meet in
open forum to share their conclusions.
As preparation for the Seminar, participants should become sufficiently
familiar with the readings to be able to discuss them critically. Additionally,
each participant should come prepared to describe his or her own country’s
monetary policy framework as a point of departure in the discussion group.
2007
Central Banking in Episodes
of Financial Volatility
Central banks are responding to recent financial
market turbulence with various policy measures, depending
on the proximity of the dislocations, their assessment of
risks, and their instruments. As central banks apply the
tools of monetary policy, they must assess their relative
effectiveness in the short term and over the longer run.
Policy makers are called upon to balance multiple objectives,
among them the implications for economic activity and price
stability, moral hazard, and public expectations. Recent
central bank statements assessing the environment and explaining
their decisions offer valuable insights into the tradeoffs
they face as they work to stabilize financial markets.
2006
The Evolution
of Monetary Policy Frameworks
The practice of central banking has changed a great deal
in recent years. Twenty years ago, monetary policy typically
centered on the control of the money supply or the maintenance
of an exchange rate peg—and policy decisions were
almost always cloaked in mystery. Today, central banks tend
to formulate policy with reference to an inflation objective,
either explicit or implicit; although exchange rate stability
remains an important consideration in many countries. At
the same time, monetary policy has become more “transparent”:
most central bankers now view the communication of their
policies to the public as an important element of the policy
process.
Discussion will focus on the ways in which central banks’
monetary policy frameworks have evolved, emphasizing changes
in the choice of the nominal anchor for
monetary policy and the trend towards greater transparency.
The goals are to understand the reasons for the changes
that have taken place—and to anticipate the ways in
which monetary policy frameworks are likely to evolve.
Monetary
Policy Frameworks: Theory and Practice
Monetary authorities increasingly address their objectives
and policies in terms of a monetary policy framework.
Inflation targeting has emerged as a leading alternative
to money targets or exchange rate pegs. Although inflation
targeting has worked well so far in the economies in which
it is currently practiced, concerns remain about the framework’s
broader applicability. Policymakers from countries with
less well developed financial markets may worry that an
increased emphasis on inflation would create risks that
the financial system would be unable to deal with. Similarly,
adoption of inflation targeting requires increased exchange
rate flexibility, and thus greater vulnerability to exchange
rate fluctuations. Discussions will highlight practical
issues encountered in implementing policy frameworks, and
any “preconditions” that might need to be established
prior to adoption.
Monetary
Policy: Frameworks and Rules
What are the key elements of a monetary policy framework--the
institutional setting and objectives of the central bank--and
what considerations go into choosing one framework over
another? To what extent should monetary policy be “rules-based,”
with the policy rule guiding--and perhaps constraining--monetary
policy actions? In what sense can either an exchange rate
peg or inflation targeting be thought of as a monetary policy
rule?
Monetary
Policy in Different Inflationary Environments
Just a few years ago, the primary concern of most monetary
policymakers was reducing inflation, and maintaining a low
rate of inflation going forward. The success of disinflationary
policies in the past decade raises a new set of issues pertaining
to the economy's adaptation to low inflation, the conduct
of policy in such an environment, and the prevention of
outright deflation.
Monetary
Policy Frameworks
Review the current literature on central bank targets, independence,
accountability, and transparency in order to identify best
monetary-policy practice for industrial, transitional, and
developing economies.
Recent debate on the international financial architecture
emphasizes that the effects of liberalizing capital controls
on economic growth and stability may not be the same for
all countries, and that adequate supervision and enforcement
are preconditions for lifting restrictions on international
borrowing and lending.
Seminar cancelled
In the past decade, a number of industrial and developing
countries have adopted explicit inflation targets as a framework
for monetary policy. What does it mean to adopt a policy
of inflation targeting, and how does such a policy work
in practice?
In the aftermath of the Asian financial crisis, academics
and policy makers have expressed renewed interest in mechanisms
to manage exchange rate volatility. What are the tradeoffs
between direct measures to limit the financial instability
accompanying external adjustment and the domestic costs
of such stabilization mechanisms?
The Central Bank's Role in Transition Economies
The central bank is called upon to fill several role in
transition economies: financing the public sector, monetary
policy, banking regulation and supervision, oversight of
the financial system, crisis management, payment services
for the private and public sectors, and domestic financial
market development.
Globalization and its Effects on Local Economies
Examine globalization and its consequences, including the
growth in world trade and investment, the effects of globalization
on national labor markets, globalization and social policy,
and volatility and risk. Explore practical policy responses
to mitigate the negative side effects of this trend.
Implications of Increased Capital Flows to Emerging
Markets
Private capital flows to emerging markets offer an opportunity
to achieve higher living standards and faster growth rates.
But large-scale capital flows and their volatility also
pose macroeconomic and prudential challenges for recipient
countries.
The Central Bank's Role in Banking Supervision
Central banks' involvement in banking supervision and regulation
has become the subject of debate and controversy. The role
of central banks in supervisory arrangement differs markedly
across countries, demonstrating a variety of approaches
to the challenges of supervision.
