Throughout their long history, the primary concern of central banks has oscillated between price stability in normal times and financial stability in extraordinary times. In the wake of the recent global financial crisis, central banks have been given additional responsibilities to ensure financial stability, which has sparked intense debate over the nature of their role. Bankers and policy makers face an enormous challenge finding the right balance of power between the central bank and the state. This volume is the result of an international conference held at Norges Bank (the central bank of Norway). International experts and policy makers present research and historical analysis on the evolution of the central bank. They specifically focus on four key aspects: its role as an institution, the part it plays within the international monetary system, how to delineate and limit its functions, and how to apply the lessons of the past two centuries.

‘Economic policy makers - just as generals - tend to fight the last battle rather than the one at hand. Instead they should learn from history and try to find fundamental underlying principles that can guide policy. For those with an interest in monetary policy and the task of a central bank Central Banks at a Crossroads is a good start.'

Lars Heikensten - former Governor of Sveriges Riksbank, Executive Director of The Nobel Foundation

'How do societies remember? How are events that occur repeatedly, but that are separated by large gaps of time like financial crises, to be dealt with if every generation wants to learn their own lessons? This important volume argues that the history of central banking and central banks in practice holds out the possibility of creating two institutional attributes crucial for effective public policy: memory and patience. Casting a wider scope than monetary and banking history, the chapters suggest new ways of thinking about the role of central banks and their interaction with economies, polities, and societies.'

John Joseph Wallis - University of Maryland

'This book makes for fresh reading at an important juncture, as the economic recovery weakens, while some central banks begin to exit from unprecedented crisis-response policies. We live in unchartered territory, and it helps to gain a better historical perspective of central banking and the challenges these institutions face. This book should provide the basis for debate and the development of next-generation central bank policies.'

Angel Gurría - Secretary-General of the Organisation for Economic Co-operation and Development