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Should central banks also be supervisors: a political economy perspective

Author(s): Donato Masciandaro

Date published: Jan 2020

SUERF Policy Note, Issue No 125
by Donato Masciandaro, Bocconi University


JEL-codes: E58, E63, G18.
Keywords: Central banking, prudential supervision, monetary policy, political economy, financial crises.

By the early 2000s, an increasing number of countries had adopted a well-defined central bank framework in which the central bank was independent and accountable for achieving monetary policy goals, while its traditional responsibilities for pursuing financial stability had become less important. However, following the 2008-2009 Great Crisis, central banks again became involved in supervision. How can the role played by central banks in financial stability be explained? The aim of this policy note is to illustrate how empirical analyses can shed light on the political drivers that might explain the central bank’s involvement as a supervisor, discussing the case of macroprudential architectures, as well as the role of financial crises in explaining the politicians’ choices.

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SUERF Policy Note, Issue No 125SUERF Policy Note, Issue No 125

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