The Future of Central Bank Cooperation

Abstract

Central bank cooperation has a long history. From the episodic efforts to support the nineteenth century gold standard, to the personal interactions of interwar central bankers, to the institutionalized postwar efforts to maintain fixed exchange rates, to the post-Bretton Woods progress in developing standards for prudential bank regulation, central bankers have progressively consulted and coordinated their activities. Such cooperation has always been shaped by a few perennial parameters. Can central bankers agree on theory (end-means relationships)? To what extent can they agree on goals (social purpose)? Do they have the capacity (technical and institutional) to achieve their collective goals? Does the broader political environment facilitate or impede cooperation? It is easy to assume, in writing a paper on the “future of central bank cooperation,” that such cooperation is (1) easily observable (implicit in the assumption that a non-participant can meaningfully write about it), and (2) a good thing. Neither of these assumptions is without controversy, however. First, central bank cooperation is factually controversial. Looking over the historical record, there are important disagreements over whether , in fact, central bankers have cooperated at various historical moments. The passage of time does not seem to have settled the debate over whether, for example, central bankers in the nineteenth century were mutually cooperative or merely opportunistic. Much depends on how one defines cooperation. The dictionary defines it as “joint operation or action”; its antonym is “competition.”