Currency, Credit and Crisis: Central Banking in Ireland and Europe

The global financial crisis in 2008 brought central banking to the center stage, prompting questions about the role of national central banks and the multi-country European Central Bank. Currency, Credit, and Crisis seeks to provide a coherent perspective on the functions of a central bank in a small country by assessing how Ireland's financial crisis from 2010 to 2013 was handled. Patrick Honohan, Governor of the Central Bank of Ireland, offers a detailed analytical narrative of the origins of the crisis and of policy makers' conduct during its most fraught moments.

Format: Paperback / softback
Length: 392 pages
Publication date: 23 May 2019
Publisher: Cambridge University Press

The global financial crisis of 2008 brought central banking to the forefront, raising concerns about the roles of national central banks and, in Europe, the multi-country European Central Bank. Understanding the capabilities and limitations of central banks is crucial in navigating the complex financial landscape. Currency, Credit, and Crisis aims to provide a comprehensive perspective on the functions of a central bank in a small country by examining how Ireland's financial crisis from 2010 to 2013 was managed. Drawing on his extensive experience as Governor of the Central Bank of Ireland and his research and policy work at the World Bank, Patrick Honohan offers a detailed analytical narrative of the crisis's origins and the actions taken by policymakers during its most challenging moments.

The global financial crisis of 2008 brought central banking to the forefront, raising concerns about the roles of national central banks and, in Europe, the multi-country European Central Bank. Understanding the capabilities and limitations of central banks is crucial in navigating the complex financial landscape. Currency, Credit, and Crisis aims to provide a comprehensive perspective on the functions of a central bank in a small country by examining how Ireland's financial crisis from 2010 to 2013 was managed. Drawing on his extensive experience as Governor of the Central Bank of Ireland and his research and policy work at the World Bank, Patrick Honohan offers a detailed analytical narrative of the crisis's origins and the actions taken by policymakers during its most challenging moments.

The crisis originated from a combination of factors, including a housing bubble in Ireland, a global financial downturn, and lax regulatory oversight. The Central Bank of Ireland, led by Honohan, implemented a series of measures to address the crisis, including quantitative easing, interest rate cuts, and bank bailouts. However, the crisis had far-reaching consequences, including a significant increase in Ireland's national debt and a decline in the country's economic growth.

One of the key challenges facing central banks is the balance between maintaining economic stability and promoting growth. Central banks often face the difficult decision of whether to tighten monetary policy to reduce inflation and risk a recession or to loosen policy to stimulate economic growth and risk inflationary pressures. Honohan discusses the challenges of managing this balance and the importance of having clear communication and transparency with the public.

Another important aspect of central banking is the role of monetary policy in addressing inequality and promoting social welfare. Central banks can use monetary policy to influence interest rates, which can have a significant impact on the cost of borrowing for individuals and businesses. Honohan argues that central banks should consider the impact of their policies on different groups in society and work towards promoting economic inclusion and social mobility.

Central banks also play a critical role in managing financial stability and preventing financial crises. They monitor financial institutions and markets for signs of stress and instability, and take action to prevent crises from escalating. Honohan discusses the importance of having effective regulatory frameworks in place and the role of central banks in promoting financial stability and resilience.

However, central banks are not without limitations. One of the biggest challenges is the impact of global economic trends on domestic economies. Central banks may have limited control over the actions of other countries and global financial institutions, which can have a significant impact on domestic economic conditions. Honohan argues that central banks should work towards developing stronger international cooperation and coordination to address global economic challenges.

Another limitation is the potential for political interference in central bank decisions. Central banks are independent institutions, but their decisions can still be influenced by political pressure and political ideology. Honohan discusses the importance of maintaining political independence and ensuring that central bank decisions are made based on objective economic analysis and evidence.

In conclusion, Currency, Credit, and Crisis provides a valuable insight into the functions of a central bank in a small country. By examining how Ireland's financial crisis was managed, Honohan offers a comprehensive perspective on the capabilities and limitations of central banks. Central banks play a critical role in shaping the economic landscape and promoting stability and growth. However, they must navigate a complex set of challenges and limitations, including the impact of global economic trends, political interference, and the need for clear communication and transparency with the public. By working towards developing stronger international cooperation and coordination, central banks can better address the global economic challenges facing the world today.

Weight: 578g
Dimension: 154 x 227 x 22 (mm)
ISBN-13: 9781108741583