Central Banks and Competition Authorities: Institutional Comparisions and New Concerns

33 Pages Posted: 1 Dec 2010

See all articles by John Vickers

John Vickers

University of Oxford - Department of Economics

Date Written: November 1, 2010

Abstract

The establishment of independent authorities for monetary policy and for competition policy was part of the institutional consensus of the Great Moderation. The paper contrasts how policy has operated in the two spheres, especially as regards the role of law. It then discusses the application of competition policy to banks before and during the crisis, and relationships between competition and financial stability. Finally, the paper considers whether the financial crisis - which has led, at least temporarily, to unorthodox and less independent monetary and competition policies - has undermined the long-term case for independence. The conclusion is that it has not. While regulation of the financial system clearly requires fundamental reform, sound money and markets free from threats to competition remain fundamental to long-run prosperity; those ends are best pursued by focused and independent monetary and competition policies.

Keywords: Central Bank Independence, Monetary Policy, Competition Law, Merger Policy, Financial Stability, Banks

JEL Classification: E58, E61, K21, L4

Suggested Citation

Vickers, John, Central Banks and Competition Authorities: Institutional Comparisions and New Concerns (November 1, 2010). BIS Working Paper No. 331, Available at SSRN: https://ssrn.com/abstract=1717809 or http://dx.doi.org/10.2139/ssrn.1717809

John Vickers (Contact Author)

University of Oxford - Department of Economics ( email )

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