Winter 2021 Vol.12 Ed.1
This edition of The Bulletin aims squarely at the big issues that will dominate discussions among policy-makers throughout 2021, and probably for some time after that.
Will inflation return? Will digital currencies take root? What impact will the Biden administration have on geopolitics, and especially China’s place in the world? Will the dollar continue to decline? Can sustainable finance make the impact it needs to help combat climate change?
Our cover story, written by OMFIF’s chairman David Marsh, directly addresses a question that matters hugely to many of our members and readers: what is the role of a central bank today?
It’s easy to consider issues relating to central bank independence as a recent phenomenon, brought on by Covid-19. But the virus has amplified a concern that has been present since at least the 2008 global financial crisis, as Marsh and the policy-making luminaries he interviews point out.
The Bulletin poll confirms that many members of the OMFIF network share the concerns of central bankers that if monetary policy is placed at the service of fiscal policy, then trust in central banks – the very credibility that underpins the financial system – is at risk. The problem, perhaps, is that central banks are now operating in too many fields. This has limited their room for manoeuvre, and also given their critics more targets to aim at.
The real crunch will come when central banks have to counter inflationary pressures again. According to most experts, including the authors of our Money Matters column, that moment approaches. Meghnad Desai, chairman of the OMFIF advisory board, disagrees, saying we have entered a new, long-term era of low inflation.
As always, OMFIF looks forward to promoting discussion, at our meetings and in our publications, at the highest levels of policy-making.
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