Abstract
Advances in the economic management of information have worked pervasive change throughout the world economy and its financial system. With respect to one kind of advance, embodied in electronic computing and communications, this change has been highly visible. Another kind of advance, in the design of institutions to function well in private-information environments, has been equally significant. In this paper, I examine how both types of advance affect a key sector of the financial system: central banking. This examination focuses on three areas:
-
Implications of innovation induced by information technology in payment arrangements for monetary policy objectives;
-
Operational and design requirements for electronic information systems to ensure the integrity and security of the financial system (including central bank settlement of large-value payments); and
-
Meaning of, and requirements for, transparency of central bank decision-making.
The views expressed herein are solely those of the author, and do not necessarily reflect views of the Federal Reserve Bank of Chicago or the Federal Reserve System. The author is indebted to Charles Goodhart and Staffan Viotti for their helpful comments on a draft of this article.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Accredited Standards Committee X9 on Financial Services (1998), ANSI Standard X9.52, American National Standards Institute.
Accredited Standards Committee X9 on Financial Services (1999), Technical Guideline TG-25–1999, American National Standards Institute.
Aiyagari, R., R.A. Braun, and Z. Eckstein (1998), Transaction Services, Inflation and Welfare, Journal of Political Economy 106, 1274–1301.
Andersen, L. and K. Carlson (1974), The St. Louis Model Revisited, International Economic Review 15, 305–327.
Arrow, K.J. (1974), The Limits of Organization (W. W. Norton, New York).
Bank for International Settlements (1996), Implications for Central Banks of the Development of Electronic Money.
Bank for International Settlements (1998), Reducing Foreign Exchange Settlement Risk: A Progress Report.
Canzoneri, M.B. (1985), Monetary Policy Games and the Role of Private Information, American Economic Review 75, 1056–1070.
Chicago Board of Trade (1999), press release, August 17, http://www.cbot.com/points_of_interest/pressbox/pressreleases/p9908173.html.
Cukierman, A. and A.H. Meltzer (1986), A Theory of Ambiguity, Credibility, and Inflation Under Discretion and Asymmetric Information, Econometrica 54, 1099–1128.
De Santis, V. (1998), CHIPS Update, presentation to the Money Transfer ‘88 conference, Bank Administration Institute.
Deaton, A. and J. Muellbauer (1980), Economics and Consumer Behaviour ( Cambridge University Press, Cambridge).
Faust, J. and L.E.O. Svensson (1998) Transparency and Credibility: Monetary Policy with Unobservable Goals, International Finance Discussion Paper 605 ( Board of Governors of the Federal Reserve System, Washington, D.C. ).
Feyerabend, P. (1978), Against Method ( Verso Editions, London).
Freeman, S. (1996a), Clearinghouse Banks and Banknote Over-issue, Journal of Monetary Economics 38, 101–115.
Freeman, S. (1996b), The Payments System, Liquidity, and Rediscounting, American Economic Review 86, 1126–1138.
Freeman, S. (1999), Rediscounting under Aggregate Risk, Journal of Monetary Economics 43, 197–216.
Friedman, B. (1999), The Future of Monetary Policy: The Central Bank as an Army with only a Signal Corps?, Working Paper No. 7420, National Bureau of Economic Research, Cambridge, USA.
Gavin, W.T. (special issue ed.) (1991), Price Stability: A Conference Sponsored by the Federal Reserve Bank of Cleveland, November 8–10, 1990, Journal of Money, Credit and Banking 23, 433–631.
Gilbert, R.A. and B. Summers (1996), Clearing and Settlement of U.S. Dollar Payments: Back to the Future? Federal Reserve Bank of St. Louis Review 78, 3–27.
Goodhart, C. (2000), Can Central Banking Survive the IT Revolution?, Special Paper sp0125, Financial Market Group London School of Economics, London).
Green, E.J. (1997), Money and Debt in the Structure of Payments, Bank of Japan Monetary and Economic Studies 15, 63–87 (Reprinted in Federal Reserve Bank of Minneapolis Quarterly Review 23, 1999, 13–29.)
King, M. (1999), Challenges for Monetary Policy, New and Old, presentation to the 1999 Symposium of the Federal Reserve Bank of Kansas City.
Lucas, R.E. Jr. and N.L. Stokey (1983), Optimal Fiscal and Monetary Policy in an Economy without Capital, Journal of Monetary Economics 12, 55–93.
Marjanovic, S. (1998), N.Y. Clearing House in Final Leg of Overhaul, American Banker 163, 1
Miller, P.J. (ed.) (1994), The Rational Expectations Revolution: Readings from the Front Line ( MIT Press, Cambridge ).
National Institute of Standards and Technology (1999), Data Encryption Standard (DES), U.S. Department of Commerce FIPS-46–3.
Schreft, S.L. (1992), Transaction Costs and the Use of Cash and Credit, Economic Theory 2, 283–296.
Summers, B. (1999), Integrity and Trust in Electronic Banking, presentation to the 1999 Software Engineering Symposium of the Carnegie Mellon Software Engineering Institute.
Söderlind, P. and L. Svensson (1997), New Techniques to Extract Market Expectations from Financial Instruments, Journal of Monetary Economics 40, 383–429.
U.S. Congress (1986), The Federal Reserve Bank of New York Discount Window Advance of $22.6 Billion Extended to the Bank of New York, Serial No. 99–65.
Wallace, N. (1984), Some of the Choices for Monetary Policy, Federal Reserve Bank of Minneapolis Quarterly Review 8, 15–24. (Reprinted in Miller, 1994.)
Wallace, N. (1986), The Impact of New Payment Technologies: A Macro View, in: C. Lawrence and R.P. Shay (ed.), Technological Innovation, Regulation, and the Monetary Economy (Harper and Row, Cambridge, USA ) 201–206.
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2001 Springer Science+Business Media New York
About this chapter
Cite this chapter
Green, E.J. (2001). Central Banking and the Economics of Information. In: Santomero, A.M., Viotti, S., Vredin, A. (eds) Challenges for Central Banking. Springer, Boston, MA. https://doi.org/10.1007/978-1-4757-3306-8_9
Download citation
DOI: https://doi.org/10.1007/978-1-4757-3306-8_9
Publisher Name: Springer, Boston, MA
Print ISBN: 978-1-4419-4891-5
Online ISBN: 978-1-4757-3306-8
eBook Packages: Springer Book Archive