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The economic and political importance of central banks has been much enhanced recently. With governments unwilling or unable to use countercyclical fiscal policy, monetary policy, conventional and unconventional often is the only stabilisation tool in town.
Much of the enhanced significance of central banks is due, however, to their lender of last resort and market maker of last resort roles for financial institutions and sovereigns.
The (quasi-) fiscal roles played by central banks have also grown materially.
These quintessentially political growing roles have not been matched by greater accountability, both formal and substantive, of central banks. Possible remedies are discussed.
About the Speaker:
Willem Buiter is Chief Economist at Citi since 2010. He taught at the LSE, and the universities of Princeton, Yale, Cambridge and Bristol. He was an external MPC member from 1997 till 2000 and Chief Economist at the EBRD from 2000 till 2005.