Central banks' priorities today - price stability in relation to financial stability

Nexhat Kryeziu

Session

Management, Business and Economics

Description

The study aims to address the role of central banks today, namely their focus on changing based on external impacts globally. Historically the main objective of central banks was maintaining price stability. However, in the new context emerging from the post-global financial crisis (2007-2009), there is a gradual shift by many central banks towards maintaining financial stability, along with their primary focus on price stability. Therefore, taking into account the new circumstances that emerged from the crises, there was a need to change the traditional objectives of central banking too. This paper analyses the legal framework and the mandate of some central banks, mainly Kosovo's neighboring countries. Furthermore, the study also discusses the historical developments of the evolution of the legal priorities of the Central Bank of Kosovo, in the context of today's trend - maintaining financial stability. Moreover, the study describes the historical aspect of the evolution of the Central Bank of Kosovo mandate in the context of today's trends - stability and financial. The paper also deals with legal powers and developments for the US Federal Reserve, Bank of England, and European Central Bank. The results of this paper suggest that central banks should encourage more efforts in addressing financial stability alongside keeping price stability. However, there may be a permanent risk of conflict arising from pursuing the primary objective - such as price stability, which may affect financial stability.

Keywords:

Central bank, price stability, financial stability, inflation, economic growth.

Proceedings Editor

Edmond Hajrizi

ISBN

978-9951-550-47-5

Location

UBT Kampus, Lipjan

Start Date

30-10-2021 12:00 AM

End Date

30-10-2021 12:00 AM

DOI

10.33107/ubt-ic.2021.512

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Oct 30th, 12:00 AM Oct 30th, 12:00 AM

Central banks' priorities today - price stability in relation to financial stability

UBT Kampus, Lipjan

The study aims to address the role of central banks today, namely their focus on changing based on external impacts globally. Historically the main objective of central banks was maintaining price stability. However, in the new context emerging from the post-global financial crisis (2007-2009), there is a gradual shift by many central banks towards maintaining financial stability, along with their primary focus on price stability. Therefore, taking into account the new circumstances that emerged from the crises, there was a need to change the traditional objectives of central banking too. This paper analyses the legal framework and the mandate of some central banks, mainly Kosovo's neighboring countries. Furthermore, the study also discusses the historical developments of the evolution of the legal priorities of the Central Bank of Kosovo, in the context of today's trend - maintaining financial stability. Moreover, the study describes the historical aspect of the evolution of the Central Bank of Kosovo mandate in the context of today's trends - stability and financial. The paper also deals with legal powers and developments for the US Federal Reserve, Bank of England, and European Central Bank. The results of this paper suggest that central banks should encourage more efforts in addressing financial stability alongside keeping price stability. However, there may be a permanent risk of conflict arising from pursuing the primary objective - such as price stability, which may affect financial stability.