Central Banking Without Central Bank Money

42 Pages Posted: 14 Feb 2006

See all articles by Timo Henckel

Timo Henckel

Australian National University (Centre for Applied Macroeconomic Analysis)

Alain Ize

World Bank

Arto Kovanen

International Monetary Fund (IMF) - African Department

Date Written: July 1999

Abstract

Given the rapidly declining demand for central bank reserves and their gradual replacement in wholesale payments by alternative forms of money - clearinghouse money and treasury money - this paper discusses whether the complete extinction of base money could undermine monetary control. It argues that such concerns are misplaced since central banks can target interest rates and inflation even in the absence of base money. The paper explores implications for current and future central banking, including monetary and foreign exchange operations, lender of last resort, coordination between public debt and monetary management, and design of operating rules in currency boards.

Keywords: Monetary operations, payments system, inflation targeting

JEL Classification: E52

Suggested Citation

Henckel, Timo and Ize, Alain and Kovanen, Arto, Central Banking Without Central Bank Money (July 1999). IMF Working Paper No. 99/92, Available at SSRN: https://ssrn.com/abstract=880619

Timo Henckel (Contact Author)

Australian National University (Centre for Applied Macroeconomic Analysis) ( email )

Canberra ACT 0200
Australia
+61-2-61255540 (Phone)
+61-2-61255570 (Fax)

HOME PAGE: http://apseg.anu.edu.au/staff/thenckel.php

Alain Ize

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Arto Kovanen

International Monetary Fund (IMF) - African Department ( email )

1700 19th Street, NW
Washington, DC 20431
United States

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