Table of contents
Foreword to the Original Edition
Preface to the Updated Edition
Preface to the Original Edition
Section I
Introduction
1. Introduction
Questions about the Importance of Central Banking
The Main Events Leading and Relating to the Crisis
The Focus of the Book
Section II
The Traditional Areas of Activity of Central Banks
2. Currency and Payment System
Issuance of Currency
Could there be a Currency Board Instead of a Central Bank?
Payment System Services
Electronic Money Box 2.1: Real Time Gross Settlements
3. Banker to Government
Maintenance of Government Accounts
Domestic Debt Management
Conflict of Interests: Debt Management and Monetary Policy
Sovereign Bond Issues Abroad
Box 3.1: Types of Auctioning
Box 3.2: On the `Crowding Out'
Box 3.3: Ad hoc Treasury Bills: The Indian Experience
4. Banker to Banks
The Essential Tasks and the LoLR Function
Bank Restructuring
Competition in Banking
The Areas where Commercial Banks are and could be of Help
Box 4.1: Theoretical Perspectives on Adverse Selection
Section III
The Shining Star of Central Banking
5. Monetary Policy Making
Objectives of Policy
Pursuit of Price Stability as the Sole Objective
Reconciling Dual Objectives through a Policy Rule
The Taylor Rule
The Case for Rules as Against Discretion
The Case for Discretion in Normal Times and in Times of Stress
Indicators of Policy
Lags in Policy
Instruments of Policy
Transmission Mechanism of Policy
Uncertainties Due to Lags
Operating Procedures of Monetary Policy
Institutional Arrangements for Monetary Policy Making
Transparency of Policies and Practices
Box 5.1: Liquidity Adjustment Facility in India
Box 5.2: Bank Reserves, Reserve Money, Money Supply and Money Multiplier
Box 5.3: Payments Systems and Monetary Policy
Box 5.4: The Yield Curve
Box 5.5: The Corridor of Interest Rates
Box 5.6: Liquidity Forecasting in Central Banks: Illustrative Template
Section IV
The New Concerns
6. Financial Stability
Financial Stability in the Context of Financial Development
The Early Warning Signals and Hedging Mechanisms
Liquidity Forecasts
Illiquidity versus Insolvency and the Globalisation of the Crisis
Prudential Regulation and Supervision of Banks
Initiatives in Evolving Standards and Codes
Basle II and Basle III
Macro-prudential Policies for Systemic Stability
Prudential Supervision by Central Banks and Other Agencies or by a Superbody?
International Dimensions of Financial Stability Issues
Box 6.1 : Early Warning Signals of Crisis
Box 6.2 : Risk Management in Banks
Box 6.3 : The Basle Principles for Effective Banking Supervision
Box 6.4 : Key International Standards and Codes
7. Autonomy and Organisation Issues
Issues in Autonomy and Independence of Central Bank
Should Decision-Making Processes be Left out of Central Banks?
Independence, Accountability and Central Bank Governance
Independence in the Context of the Implementation of International Standards/Codes
8. Conclusions
Attachment 1 : The Asian Economic Crisis of the 1990s
Attachment 2 : The Global Financial Crisis of 2007-08: Major Events
Select References
Subject Index