A European System of Central Banks: Observations from Abroad

Throughout history, nations have devised many institutions to carry out these same tasks, often relying primarily on the private sector and market discipline, and giving governments a minimal role. Today, central banks, functioning as extensions of governments and issuing fiat currencies, attempt to ensure monetary stability. However, we have come to call upon central banks to perform many operations that extend well beyond this traditional role. The poor record of central banks with respect to price stability reflects this diffusion of purpose.