On April 20th we had the opportunity to have Francesco Papadia with us, current Senior Fellow in Bruegel and former Director General for Market Operations at the ECB. For this webinar, he presented his new book “Central Banking in Turbulent Times”.
During the session, we explored the key changes of paradigm in central banking policies that took place after the global financial and eurozone crisis. In fact, the idea that the pursuit of price stability will automatically bring about financial stability has been shattered by the magnitude of the global financial crisis.
Francesco analyses whether the predominant paradigm of mere inflation targeting that was supposedly validated by the Great Moderation is still an appropriate framework today. Do we need an extension of the pre-crisis central bank model now that a stronger emphasis on financial stability is placed? What will central banking look like in the future? Francesco seeks to answer these questions by sharing valuable insights from the book.
The tentative answer is that incremental adjustments rather than drastic changes are required to take the lessons of the crisis into consideration.
In my view, this webinar was really interesting because it gave us the chance to discuss monetary policy issues directly with a former central banker, complementing in this way the ordinary academic literature and giving rise to critical reflection with respect to macroeconomics. Considering that Francesco has nearly forty years of central banking experience made it a pleasure to learn from him.