Are Monetary policy institutions converging?

I had asked earlier it will be interesting to see how institutional frameworks in monetary policy  shape up. My hypothesis was though the objective was single- price stability, the way various central banks manage it (their institutional structure) differs widely.

I had pointedto a William White paper on the subject who makes a broad comment confirming my hypothesis.

This recent paper by Corrine Ho of BIS looks at the hypothesis more specifically:

Just as monetary policy at the strategic level has undergone significant changes over the years, so has its day-to-day implementation. This paper documents the key features of 17 central banks’ monetary operating frameworks as of early 2007 and discusses their major developments over the preceding decade. It finds that while some common themes and practices can be identified, there is no unique “best” way to implement monetary policy. Moreover, central banks everywhere – even in industrial economies – have continued to refine their operating frameworks and procedures and to innovate where necessary, responding to changing needs in changing times.

So, like I said there is no one unique way.  The paper is a very good overview of the way various central banks manage their monetary policy.

I liked the way they differentiate certain banks interest rate target- Some Central Banks just give their stance and make changes using a market determined rates like Fed. Others use own rates to signal a rate change like RBI.

Apart from this, a very useful paper to understand various monetary policy frameworks and underlying institutions.

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