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Title: Central Bank Constitutions for Monetary Unions

Author(s): Ralph Süppel and Jürgen von Hagen

Publication Date: March 1994

Keyword(s): Central Banks, Monetary Policy and Monetary Union

Programme Area(s): International Macroeconomics

Abstract: Historical experience suggests that the distribution of monetary policy authority among the members of a monetary union is a key aspect of the design of a central bank constitution. We analyse alternative institutional solutions to that problem with different degrees of centralization of monetary policy decisions. The degree of centralization required to facilitate credible, low-inflation policies depends critically on the political structure of the monetary union. Efficient monetary stabilization requires centralized decision-making rules. Whether or not stabilization can be improved by adding central appointees to member state representatives on the central bank council depends on the stochastic structure of the relevant economic disturbances.

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Bibliographic Reference

Süppel, R and von Hagen, J. 1994. 'Central Bank Constitutions for Monetary Unions'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=919