The Evolution of Central Banks

by Charles A.E. Goodhart

The Evolution of Central Banks employs a wide range of historical evidence and reassesses current monetary analysis to argue that the development of non-profit-maximizing and noncompetitive central banks to supervise and regulate the commercial banking system fulfils a necessary and natural function. Goodhart surveys the case for free banking, examines the key role of the clearing house in the evolution of the central bank, and investigates bank expansion and fluctuation in the context of the clearing house mechanism. He concludes that it is the noncompetitive aspect of the central bank that is crucial to the performance of its role. Goodhart addresses the questions of deposit insurance and takes up the "club theory" approach to the central bank. Included in the historical study of their origins are 8 European central banks, the Bank of Japan, the Bank of England, and the Federal Reserve Board of the United States.

Genres: Economics, Finance, Nonfiction, History

218 pages, Paperback

First published January 1, 1988

About the author

Prof. Charles Albert Eric Goodhart, Ph.D. (Harvard University, 1963; B.A., Cambridge University, 1960, CBE, FBA is the Norman Sosnow Professor of Banking and Finance at the London School of Economics. Before joining the London School of Economics in 1985, he worked at the Bank of England for seventeen years as a monetary adviser, becoming a Chief Adviser in 1980.

During 1986, Prof. Goodhart helped to found, with Prof. Mervyn King, the Financial Markets Group at London School of Economics, which began its operation at the start of 1987. In 1997, he was appointed one of the outside independent members of the Bank of England’s new Monetary Policy Committee until May 2000.

Taken from here.

Reviews

[Winmonroe · Rating 4 out of 5]

8/10

A classic text on the history and theory of central banking. Goodhart writes that his mission is to revisit the history of central banking at a time when scholars of the free banking school had been increasingly arguing that central banks should be replaced be competitive private bank monetary systems, based on historical arguments. Goodhart reviews the historical record of how central banks were developed over history, with a focus on england (I have not read the appendix yet, which discusses other countires in more detail). Goodhart makes a number of interesting and provocative arguments about the nature of the money and banking. His main contention is that asymmetric information, bank asset opacity, and the essential payments function of money make competitive issuance prone to instability and that central banks naturally evolved to address these periods of instability. While at times he seems to naturalize political process, overall the book is highly informative and interesting for anyone who studies or working in central banking.

[amanda]

ojalá este señor me hiciera la tesis