Foreign central banking: the instruments of monetary policy

This monograph is the fifth of a series of publications by the Federal THIS Reserve Bank of New York designed to furnish the student of banking with information, not readily available elsewhere, concerning monetary policies and techniques. While the earlier publications dealt with the various aspects of the United States money market and the factors affecting it, the present booklet examines the techniques of central banking abroad. There has indeed been a renaissance of central banking during the past decade. Countries outside the Iron Curtain have come increasingly to rely upon monetary controls in their efforts to limit economic fluctuations and to promote sturdy economic growth. Foreign central banks, often operating within an institutional setting far different from that in the United States, have sought not only to adapt the traditional credit controls to the environment in which they function, but also to introduce new tools, and to use the various individual instruments in new and changing combinations. While the emphasis placed on the different central banking weapons has naturally varied from country to country, the broad trends and problems encountered have been remarkably similar.

Most of the material in this booklet first appeared in this Bank's Monthly Review of Credit and Business Conditions, but it has since been brought up to date and new sections have been added. The introduction provides an over-all view of the postwar trends in central banking techniques abroad, and the five succeeding chapters discuss in turn the various central banking instruments. The final chapter describes the money markets, through which much of the implementation of monetary policy must be effected, and outlines many of the measures which have been taken in various countries since the end of World War II to broaden these markets.