Central Banking Tasks in a European Monetary Union

Abstract

Henry Thornton was a perceptive observer of monetary events and a major contributor to the principles of central banking as we know them today. Had the term ‘monetary regimes’ been known in his times, an important part of his magnum opus, Paper Credit, could be put under that heading. He would have had much to say on how to reconcile short-run flexibility with long-run stability, the central task of monetary management, in a national economy as well as in a group of countries trying to develop an appropriate institutional framework for joint management of monetary policy. His ability to distil guidelines from practical experience and to derive inspiration from current events is more than ever necessary as we watch the debate on monetary integration and union in Europe.

This lecture was delivered in November 1990 and published in booklet form by City University Business School, Dept of Banking and Finance. Most of the material in the lecture is based on joint work up to 1991 between Professor Thygesen and Dr Daniel Gros of the Centre for European Policy Studies in Brussels, published in 1991 in European Monetary Integration — From EMS to EMU (Longman).