The Return of Monetarism
Over the last 30 years or so, many central bankers supposed that all they needed to do was keep their sights fixed on price stability. But we now know that they must also attend to financial stability, and that their ability to set interest rates cannot be used to achieve both aims simultaneously.
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TILBURG, THE NETHERLANDS – The current economic crisis highlights the need for major changes at central banks. It is time for a return to some form of moderate monetarism – but in a twenty-first-century mold.