Central banks have two core missions: the pursuit of monetary policy to achieve broad macroeconomic objectives and the maintenance of financial stability, including the management of financial crises. The latter mission is closely connected to regulation and supervision of the banking system, so I include this within the central banker's perspective, as well as broader issues related to systemi...

This paper reviews earlier studies and shows that the money demand (MD) relationship under a fixed exchange rate (ER) regime differs from floating ER regime, mainly due to limited role of monetary policy in former regime. It then empirically demonstrates an open-economy model augmented with country-specific factors is better framework for characterizing MD function by applying cointegration equ...