Monetary Stability Research Articles

The EU’s neoliberal constitutionalism(s)

Abstract Beyond their differences, the various currents of neoliberalism share a common legal agenda: economic constitutionalism. From ordoliberal Ordnungspolitik to new classical macroeconomics and public choice, from Hayek’s ‘constitution of liberty’ to Vanberg’s ‘constitutional political economy’, an institutional agenda has emerged around a number of key tenets: enhancing the competition between jurisdictions through (state and international) federalism; safeguarding the competitive functioning of the market through supra-legislative rules; limiting fiscal policies and disciplining public spending through balanced budget rules; neutralising monetary policy through independent and price stability-oriented central banks. These key tenets of neoliberal constitutionalism infuse the three layers of the European economic constitution: the fundamental freedoms of movement pave the way to normative competition between national legislations (microeconomic constitution); competition law guarantees the competitive structure of the market (mesoeconomic constitution); European Economic and Monetary Union implements the rules of budgetary discipline and monetary stability (macroeconomic constitution). This does not imply that the European Union is solely a neoliberal project or that the European Union’s current neoliberal path is irreversible. But it does at least raise questions about the actual room for manoeuvre left by this rigid ‘economic constitution’ to public institutions in dealing with the various current crises.

The impact of fiscal policy on achieving monetary stability in Iraq: an analytical study for the period 2004-2020

The Iraqi economy faces many economic crises, which negatively affect the monetary stability of Iraq, and the research aims to know the impact of financial policy tools in achieving monetary stability, and any of these tools that have the greatest impact in achieving the goal of monetary stability, and in order to reduce the efforts made by officials About setting the financial policy in order to achieve the best results and so that they can develop future plans that have a greater impact on the economy. The importance of the research stems from the importance of monetary stability and the positive or negative effects it causes in the economy. It is concluded through the research that the effect of fiscal policy is weak in reaching the goal of monetary stability for Iraq in light of the fluctuations and fluctuations that occur in the financial policy tools. However, public expenditures as a tool for fiscal policy have the greatest impact compared to other tools of fiscal policy in the field of monetary stability.

Transformation from Neoclassicism to Austrian School: Javier Mileis Economic Evolution

Under President Javier Milei, Argentina's economic policies have drastically changed, shifting from neoclassical concepts to an Austrian School-inspired libertarian framework. His administration has placed a high priority on deregulation, fiscal restraint, and monetary stability in an effort to reduce government intervention and combat inflation. The economic, social, and political effects of Milei's actions during his first one-and-a-half years in power are evaluated in this paper, along with views from across the world and the viability of implementing his strategy in Germany. This study uses a mixed-methods approach, using quantitative data (inflation, GDP, unemployment rates, and fiscal balances), secondary literature (economic analysis, political commentary), and primary sources (government programs, Milei's speeches). According to the results, Milei's measures have been effective in lowering inflation, which by October 2024 had dropped from 211% in 2023 to a monthly rate of 2.7%. The social consequences of quick fiscal consolidation are reflected in the fact that these changes have also resulted in an economic recession (GDP -4%), increased unemployment (8%), and a rise in poverty (53%). Reactions to Milei's policies have been divided on a global scale. Keynesian critics warn of economic stagnation and growing inequality, while Austrian and libertarian economists praise his deregulation and fiscal restraint. In terms of transferability, Germany's robust social market economy and institutional protections make full-scale adoption of free-market ideas impossible, even though some of them may be modified there. Future research should look at the long-term impact of Milei's changes and their applicability in various economic circumstances since the study concludes that his initiatives provide both potential and risks and serve as a test case for extreme fiscal conservatism

The role of economic intelligence in enhancing the monetary capacity of the Central Bank of Iraq (Japan as a model)

Economic intelligence is an emerging, complex, and multidisciplinary field that has gained prominence in recent years, driven by the growing significance of the economy in shaping international relations. It has become a critical component in the operations of governments and central banks, with Japan’s experience serving as a notable example of its successful implementation. In Japan, monetary management has played a pivotal role not only in fostering financial and economic stability but also in benefiting society at large. This was achieved through strategic influence on interest rates and the stimulation of investments in both the public and private sectors. In stark contrast, the Iraqi economy has faced persistent financial and monetary instability, largely due to its heavy dependence on oil revenues as a source of foreign exchange. A key finding of this research highlights the importance of revitalizing monetary management by leveraging the exchange rate tool, which has historically been controlled through oil-derived foreign exchange revenues.

On the need to change the constitutional position of the President of the National Bank of Poland

The experience of the 2008 global financial crisis and the Covid-19 epidemic indicate that the objectives of central bank operations have evolved - currently, the goal of monetary stability has proven to be an insufficient. The mandate of central banks has been strengthened and supplemented by measures for financial system stability. The global financial crisis, as well as the crisis caused by the Covid-19 pandemic, has also highlighted that proper coordination of fiscal and monetary policies is crucial. The purpose of this article is to analyze the systemic role of the President of the NBP from the point of view of the evolving role of central banks and the need to ensure the coordination of fiscal and monetary policy in the context of the preparation of law on the fiscal council.

Peran Sukuk dalam Stabilitas Moneter di Indonesia

Sukuk as an Islamic financial instrument plays a strategic role in supporting monetary stability in Indonesia. This study explores the relationship between sukuk and monetary policy variables, such as inflation, exchange rate, and economic growth. Sukuk has proven to be a stable instrument that supports sustainable development by mitigating external debt risks. Through the analysis of the monetary policy transmission mechanism, this study identifies the role of sukuk in asset price and exchange rate channels. The results show that sukuk has a positive impact on monetary stability and long-term economic growth.

Central banks, monetary stability, and the varieties of capital control liberalization

Abstract This article explores the differential liberalization of capital controls in advanced market economies. It shows that although finance-led economies abolished controls by the 1980s, export-led economies retained significant restrictions into the 1990s, contributing to differential financial market development. A historical comparison of Germany and the UK (1961–1985) finds that differential control use resulted from central bankers’ varying expectations of controls’ monetary functions in the domestic economic context. As capital became mobile in the 1960s, sudden capital in- and outflows jeopardized price and currency stability. In the German context of macroeconomic stability, controls effectively limited capital inflows and arrested destabilizing inflationary and exchange rate pressures. However, in the British context of macroeconomic instability and capital outflows, controls could not sufficiently restore stability: as loose fiscal and monetary choices persisted, monetary conditions deteriorated. Thus, Bank of England officials became fervent advocates for control liberalization to enforce restrictive fiscal and monetary choices via market pressures.

Toward an Intersectional Analysis of Money: Racial Capitalism, Stagflation, and Unemployment as Economic Policy

Abstract: This essay details the economic austerity of the 1970s during the era of stagflation and monetary instability. It describes the role of racism, patriarchy, and other social systems of difference in these policy choices, and thus argues that an intersectional analysis is critical to understanding the fabrication of money. As the US dollar transitioned fully off the gold standard, policymakers tolerated significant unemployment as they sought to manage inflation. The unemployment and economic violence of this era was widespread, but not evenly shared. Instead, policymakers constructed monetary stability and faith in fiat currency on the backs of the most vulnerable. However, grassroots movements, such as Coretta Scott King’s Full Employment Action Council and the National Welfare Rights Organization, pushed for alternative solutions to both inflation and wagelessness. By outlining these contests, I suggest that although violence has been intertwined with the history of money, critical analyses of money also reveal shared interdependencies across the world.

Understanding the use of unconventional monetary policy for portfolio decarbonisation in Europe

This study examines the European Central Bank's (ECB) use of unconventional monetary policy to decarbonise its balance sheet, focusing specifically on the inherent trade-offs between monetary stability and environmental sustainability. We investigate how the ECB's green asset purchases, as part of its Corporate Sector Purchase Programme (CSPP), affect the liquidity of its portfolio compared to similar assets not held by the ECB. While these assets align with green objectives, they exhibit significantly lower liquidity than their non-green counterparts. This discrepancy highlights a fundamental tension within the ECB's policy framework: the commitment to environmental sustainability may undermine liquidity and, by extension, the overall effectiveness of monetary policy. Our findings suggest that the ECB's strategy to integrate environmental considerations into its operations, though successful in supporting greener initiatives, poses challenges for maintaining strong liquidity levels. The study underscores the need for innovative financial instruments and strategies to reconcile the dual objectives of promoting environmental sustainability and ensuring monetary stability.

The Oil Price Shocks and the Monetary Stability in Saudi Arabia

The Oil Price Shocks and the Monetary Stability in Saudi Arabia

The Impact of Cryptocurrency and Electronic Money Use On The Circulating Money Supply and Monetary Stability in Indonesia

The purpose of this research is to analyze the long-term and short-term impacts of the use of cryptocurrency and electronic money on the money supply (M2) in Indonesia, as well as to analyze the long-term and short-term impacts of the use of cryptocurrency and electronic money on monetary stability (exchange rates) in Indonesia. The research method used is quantitative descriptive analysis with the Vector Error Correction Model (VECM) using the Eviews application and secondary data in the form of monthly data from 2011 to 2023 obtained from the official websites of Bank Indonesia and Finance. This study utilizes data on cryptocurrency transaction values and electronic money transaction values in Indonesia by analyzing the VECM model, which can observe the long-term and short-term impacts of the use of digital money on the money supply and monetary stability, in this case, viewed through the Indonesian exchange rate. The research results indicate that there is a one-way causality between electronic money and cryptocurrency, but not the other way around, and there is a one-way causality between the money supply and cryptocurrency, with the money supply as the dependent variable influencing cryptocurrency. The results of the VECM estimation indicate that in the long term, electronic money has a negative and sifnificant impact on the money supply. Meanwhile, the short-term estimation shows that both cryptocurrency and electronic money significantly influence the money supply, but their effects are dynamic and vary based on different lags. The long-term estimation with the exchange rate as the dependent variable shows that cryptocurrency does not have a significant impact on the exchange rate, while in the short term, both cryptocurrency and electronic money have a negative and significant effect on the exchange rate.

Gender Dynamics and the Socioeconomic Implications of Infertility in Sierra Leone: A Study on Health, Social Stigmatization, and Economic Impact

Gender Dynamics and the Socioeconomic Implications of Infertility in Sierra Leone delves profoundly into the intricate effects of infertility on persons and broader society. Infertility in Sierra Leone surpasses medical confines, interweaving fundamentally with cultural, communal, and economic factors. Women disproportionately bear the consequences, suffering from social exclusion, economic hardship, and psychological distress. Societal expectation that ties femininity to motherhood increase these stresses. This societal expectation places immense anxiety on women who are unable to conceive, regularly resulting in discrimination, stigmatization, and isolation from family and social life. Financially, families expend considerable amounts on fertility treatments, which frequently lead to monetary instability, especially in lower-income families. Infertile women, already marginalized, face compounded challenges due to reduced inheritance rights, limited economic possibilities, and societal exclusion. Psychologically, the emotional toll is severe, with many experiencing depression, anxiety, and isolation. The research calls for comprehensive policies that address the multifaceted character of infertility. It advocates for gender-sensitive reproductive wellness initiatives and societal efforts to decrease the stigma associated with infertility. By promoting equitable access to healthcare, improving mental health services, and tackling cultural stigmatization, the study emphasizes the need for a holistic approach to mitigate the socioeconomic and health-related impacts of infertility in Sierra Leone. Ultimately, the findings highlight the urgency of policy reforms that integrate medical, social, and economic viewpoints to better support those affected by infertility.

The Impact of Cryptocurrency and Electronic Money Use On The Circulating Money Supply and Monetary Stability in Indonesia

The purpose of this research is to analyze the long-term and short-term impacts of the use of cryptocurrency and electronic money on the money supply (M2) in Indonesia, as well as to analyze the long-term and short-term impacts of the use of cryptocurrency and electronic money on monetary stability (exchange rates) in Indonesia. The research method used is quantitative descriptive analysis with the Vector Error Correction Model (VECM) using the Eviews application and secondary data in the form of monthly data from 2011 to 2023 obtained from the official websites of Bank Indonesia and Finance. This study utilizes data on cryptocurrency transaction values and electronic money transaction values in Indonesia by analyzing the VECM model, which can observe the long-term and short-term impacts of the use of digital money on the money supply and monetary stability, in this case, viewed through the Indonesian exchange rate. The research results indicate that there is a one-way causality between electronic money and cryptocurrency, but not the other way around, and there is a one-way causality between the money supply and cryptocurrency, with the money supply as the dependent variable influencing cryptocurrency. The results of the VECM estimation indicate that in the long term, electronic money has a negative and sifnificant impact on the money supply. Meanwhile, the short-term estimation shows that both cryptocurrency and electronic money significantly influence the money supply, but their effects are dynamic and vary based on different lags. The long-term estimation with the exchange rate as the dependent variable shows that cryptocurrency does not have a significant impact on the exchange rate, while in the short term, both cryptocurrency and electronic money have a negative and significant effect on the exchange rate.

Parallel Currencies under Free Floating Exchange Rates: A Model Setting Out the Conditions for Stable Currency Competition

We use a theoretical model to set up the conditions for a country to attain monetary stability by allowing for two freely tradable currencies to circulate in parallel. For this parallel system to function properly, confidence in the good behavior of the monetary authorities in charge of the two currencies is key. Our model shows how a floating exchange rate between the two can keep the issuers of the local currency in check. The results from our model show the conditions under which a parallel currency system disciplines the issuers of the currencies and thus maintains their purchasing power. In non-volatile economies, it also discourages governments (or private issuers) from inflating one of the currencies as a means to raise seigniorage, as this policy results in the displacement of the currency from the market. When foreign payments shortfall—such as in Greece and Cyprus during the ‘euro crisis’ in the mid-2010s, or intractable hyperinflation—leave the country without a medium of exchange, our model shows how currency choice can restore monetary circulation and offer a path to achieving and maintaining monetary stability.

The Economic Competence of the Labour Party in Historical Perspective

AbstractThe theme of the relationship between Labour Party and economic competence resurfaced in February 2024 when Keir Starmer decided to scale down its £28 billion green investment pledge. This work explores the historical and structural reasons why the economic competence issue has tended to be ‘owned’ by the Tories. It highlights that the definition of economic competence has often coincided with an emphasis on monetary stability and balancing government budgets with relatively low levels of taxation from the late 1970s onwards. The Exchange Rate Mechanism (ERM) crisis in the 1990s led to a partial redefinition of economic competence, now built around a political economy of ‘constrained discretion’ and ‘credible Keynesianism’. The 2007–8 global financial crisis gave the Conservative Party the opportunity to regain its reputation for competence by arguing that the crisis had been the consequence of excessive public spending. The Labour Party's decision to sacrifice its biggest single policy pledge on the altar of financial probity heralds the difficulties that the new Labour government will face when attempting to reconcile the need for an active and strategic state with its stance on fiscal rectitude.

A model for economic freedom on Mars

The momentum of human spaceflight initiatives continues to build toward Mars, and technological advances may eventually enable the potential for permanent space settlement. Aspirations for sustaining human life in space must be predicated on human factors, rather than technological constraints alone, and advances in models of governance and ethics are necessary as human civilization becomes a spacefaring species. This paper presents an idealistic but feasible model for economic freedom on Mars, which is situated within a framework in which Mars has been designated as a sovereign juridical peer to Earth. Under such conditions, Mars could maintain monetary stability through full reserve banking and a restriction on exchange with any fractional reserve Earth currencies, with a volume of circulating currency that changes based on the total population within fixed capacity infrastructure. Mars could maintain long-term political stability by diffusing the ownership of capital on Mars, which would allow all citizens of Mars to draw sufficient wealth from a combination of capital ownership and labor to live a good life. This model could also support limited tourism on Mars, in which real goods are exchanged for services but currency transactions between planets are prohibited. This model demonstrates the potential for a viable and sustainable economy on Mars that could conceivably be implemented, including on a sovereign Mars but also in other scenarios of space settlement. More broadly, this model illustrates that ideas such as diffuse capital ownership and limited government can enable freedom in space, and numerous models beyond a centralized world space agency should be explored to ensure the optimal governance of the emerging space economy.

Alternative Exchange Rate Systems for Oil-Exporting Countries: Frankel’s Currency-Plus-Commodity Basket Proposal versus the Current System

Choosing an appropriate exchange rate regime is crucial for economic policy, particularly for developing countries seeking to establish robust macroeconomic frameworks to mitigate external shocks. However, such nations, including those reliant on oil and natural gas exports, often face challenges in selecting suitable regimes, exacerbated by a lack of traditional advice. The debate around this issue intensified in the aftermath of the 2014 oil price decline. In response, Jeffrey Frankel proposed the currency-plus-commodity basket (CCB) arrangement in 2017, blending the benefits of floating and pegging. This study applies the CCB system to Algeria, aiming to evaluate its impact compared to the current managed floating regime from 2001 to 2021, on indicators of internal (inflation rates) and external (change in foreign exchange reserves) balance using monthly data. Employing wavelet analysis and robustness tests, specifically quantile-on-quantile regression (QQR), the findings suggest that the CCB regime surpasses managed floating in maintaining monetary stability and achieving internal and external balance. Moreover, it provides greater flexibility and stimulates the domestic economy through its ability to stabilize terms of trade via active countercyclical monetary policy. Nonetheless, further discussion, adjustment, experimentation, and development of the proposed regime are warranted.

Does Bank Credit Fluctuation Affect Inflation? Evidence from Indonesia

Both developed and developing nations frequently encounter the economic challenges of inflation. Middle- and low-income developing countries generally experience higher inflation rates than their high-income developed counterparts. Interest rates influence the relationship between credit distribution and inflation. This study examines how fluctuations in bank lending affect inflation in Indonesia. Monthly data from 2016 to 2023 were analyzed using the Autoregressive Distributed Lag (ARDL) approach. The findings reveal that working capital loans significantly positively affect Indonesian inflation in both the short and long term. While investment credit shows no short-term impact on inflation, it significantly positively influences the long run. Consumptive credit exhibits a significant positive effect on inflation in the short term but a significant negative effect in the long term. The BI rate shows no short-term influence on inflation. However, it has a significantly negative impact in the long term. Based on these results, it is recommended that Bank Indonesia enhance its coordination of monetary stability, inflation control, and financial system improvements, particularly regarding interest rates. Additionally, banks acting as intermediaries should monitor the utilization of working capital, investments, and consumptive credit to help manage inflation in Indonesia.

Making the Ethiopian Banking System Ready for Green Growth and Development

ABSTRACT After two decades of high economic growth and fast development progress, Ethiopia is facing significant macroeconomic challenges such as high inflation, foreign exchange shortage, and slowing growth. At the same time, it is imperative to bring the economy on a green and climate-resilient development path. In this context, the financial sector has an essential role to play. International financial institutions recommend reducing the fiscal deficit to dampen money growth and inflation and giving up exchange rate control. Based on an alternative analysis of inflation, this article argues that money supply restrictions and fiscal austerity may not only prove ineffective in addressing inflation while incurring high economic costs, but also impede a response that comes via productive and green investment to ease the economy’s supply-side constraints and to lower inflation. Rather than fixating on the quantity of money and market exchange rates, central banking should focus on the direction of financial flows to make sure they go into real green investment rather than speculative and inflation-driving investment. This policy blueprint will also reduce balance-of-payments problems and improve both internal and external monetary stability.

Reconsideration of modern monetary theory-type fiscal and monetary stabilization policy from a viewpoint of the dynamic Keynesian model

Reconsideration of modern monetary theory-type fiscal and monetary stabilization policy from a viewpoint of the dynamic Keynesian model