The Japanese Central Banking System Compared with Its European and American Counterparts: A New Institutional Economics Approach

ISBN-13: 9789811390005 / Angielski / Twarda / 2019 / 327 str.

Yoshiharu Oritani

Opis

This book uniquely explores the role and governance mechanism of central banks by applying new institutional economics (NIE). Simultaneously, the book tests the analytical viability of NIE when applied to an organization that has both public and private characteristics. Special attention is paid to the Bank of Japan (BOJ) based on the author's 30 years of work experience and "participant observation" there, touching upon discussion of central bank independence. The book argues that central bank independence cannot be defended solely by law, and a mechanism to eliminate requests from politicians needs to be embedded within the governance structure.The book also provides a comparative analysis between the BOJ and central banks in Europe and the USA. In reviewing the global financial crisis of 2008-2009, it suggests possible measures based on behavioral economics and public choice theory. These theory-based analyses provide useful insights when considering matters such as whether a central bank should issue electronic money or the European system of central banks could be established in Asia.

Recenzje

"This book has no equal in comprehensively reviewing the implications of new microeconomic theory for central banking. ... Because of its comprehensiveness and the clarity of its summaries of these new theories, this book is likely to become a lasting reference. This is aided by the very methodical layout, the extensive bibliography (including many Japanese publications, whose key points are summarised in the text) and a good index." (Philip Turner, Central Banking Journal, December 3, 2019)

Spis treści

Foreword

Preface

Acknowledgements

1 Rationale of Central Banks

1.1 Overview

1.2 Earlier Studies

1.2.1 Bagehot’s Study

1.2.2  Sayers’ Study

1.2.3 Smith’s Study

1.2.4 Hayek’s Study

1.3 Three Types of Banking Systems and Three Modes of Economic Systems

1.3.1 Three Types of Banking Systems

1.3.2  Examples of Type Change from Type A to Type C in Japan and the US

1.3.3 Three Modes of Economic Systems

1.3.4  Transaction Costs and Modes of Economic Systems

1.3.5 Asset Specificity and Modes of Economic Systems

1.4 Analysis of Transaction Costs in Interbank Transactions

1.4.1 Methodology

1.4.2 Transaction Costs of a Banking System with no Central Bank

1.4.3 Transaction Costs of a Banking System with Central Bank Only

1.4.4      Transaction Costs of a Banking System with Both Central Bank and Commercial Banks

1.5 Importance of Institutional Environment and Recent Changes

1.5.1  Institutional Environment and its Influence

1.5.2 Recent Major Changes in the Institutional Environment

1.6 Implications for Institutional Issues of Central Banks

1.6.1 Evolution of a Supranational Central Bank

            1.6.2    Bankers’ Associations vs. Central Banks

            1.6.3    Central Bank as Supervisor

            1.6.4    Clients and Business Scope of Central Banks

1.7 Conclusion

 

2 Governance Structure of Central Banks

2.1 Overview

2.2 Governance Structure Theory of New Institutional Economics

2.2.1  Williamson’s Governance Structure Theory

2.2.2 Theory of Club Goods and Governance Structure of Club Organization

2.3 Application to Central Bank Governance Structure

2.3.1 Central Bank Services and Organizational Features

            2.3.2    Arguments on the Governance Structure of Central Banks

2.4 Designing a Central Bank Board Structure

2.4.1 Multiboard Structure

2.4.2 Examples of a Central Bank Multiboard Structure

2.5 Role of Capital Stock

2.5.1 Identifying Matters Related to Central Bank Capital Stock

2.5.2 Application of Williamson’s Theory to Capital Stock

2.5.3      Central Bank Capital Stock from the Perspective of Organizational Culture Theory

2.6 Conclusion

 

3 Public Governance of Central Banks

3.1 Overview

3.2 Application of Transaction Cost Economics

            3.2.1    Application of Williamson’s Governance as Probity Hypothesis

3.2.2      Application of Moe’s Theory on the Autonomy of a Bureaucratic Organization

3.3 Application of Agency Theory

            3.3.1    Agency Theory and the Political Process

            3.3.2    Features of the Principal-Agent Relationship of a Central Bank

            3.3.3    Congressional Dominance Hypothesis and the Central Bank

            3.3.4    Multiboard System of the Central Bank Based on Agency Theory

            3.3.5    Agency Problem of a Central Bank and Accountability

3.4 Application of Public Choice Theory

            3.4.1    Cycle Theory Under Majority Rule and Central Banks

            3.4.2    Vote-Maximizing Behavior Hypothesis and Countermeasures

3.5 Conclusion

 

4 Governance of Monetary Policy

4.1 Overview

4.2 Issue Identification

            4.2.1    What is Monetary Policy?

            4.2.2    Period When Monetary Policy was Conceived

            4.2.3    Governance Issues of Monetary Policy

4.3 Approach from Transaction Cost Economics

            4.3.1    Integration of Monetary Policy and Market Operation Bodies

            4.3.2    Integration of Monetary Policy and Exchange Rate Policy Bodies

4.3.3      Integration of Monetary Policy and Unconventional Monetary Policy Bodies

            4.3.4    Integration of Monetary Policy and Prudential Policy Bodies

            4.3.5    Implications of the Arguments

4.4 Approach from Agency Theory

            4.4.1    Outline of Multitask Agency Theory

            4.4.2    Multitask Agency Problem in a Central Bank

4.5 Approach from the Theory of Organizational Culture

            4.5.1    Outline of the Theory of Organizational Culture

            4.5.2    Application of Theory of Organizational Culture to a Central Bank

4.6 Conclusion

 

5 Ownership of Prudential Policy

5.1 Overview

5.2 Issue Identification

            5.2.1    Categories of Prudential Policy

            5.2.2    Ownership Issue of Prudential Policy

5.3 Theoretical Analysis of the Integration of Policy Bodies

            5.3.1    Macro and Micro Integration

            5.3.2    Integration of Supervisors of Multiple Financial Industries

            5.3.3    Issue of Overlapping Supervisors

5.4 Theoretical Analysis of a Central Bank’s Role in Prudential Policy

            5.4.1    Theoretical Analysis of Conflict of Interest

5.4.2      Purpose and Rationale Behind Central Bank Involvement in Prudential Policy

            5.4.3    Implications for Central Bank Role in Prudential Policy

5.5 Case of Japan and the US

            5.5.1    Japan’s Case

            5.5.2    Case of the US

5.6 Conclusion

 

 

6 Role of Central Banks in Financial Crisis Management

6.1 Overview

6.2 Study of the Failure of Financial Crisis Management by the US Authorities

            6.2.1    Effects and Process of the US Originated Global Financial Crisis

            6.2.2    Outline of Behavioral New Institutional Economics

            6.2.3    Failure of Neoclassical Economics-Based Strategy

            6.2.4    Failure of Behavioral Economics-Based Strategy

            6.2.5    Failure of Transaction Cost Economics-Based Strategy

6.3 The Importance of Risk Money in Financial Crisis Management

            6.3.1    Financial Crisis Management Strategy

            6.3.2    Risk Money Provision by a Central Bank

            6.3.3    Risk Taking by a Central Bank and Seigniorage Utilization

            6.3.4    Case Study of Financial Crisis in Japan

6.4 Conclusion

 

7 Scope and Governance of Central Bank Payment and Settlement Systems

7.1 Overview

7.2 Diversification of Central Bank Payment and Settlement Systems

            7.2.1    Diversification from RTGS to Securities Settlement System

            7.2.2    Diversification into Retail Payment Systems

7.3 Globalization of Central Bank Payment and Settlement Systems

            7.3.1    Chronology of CLS Bank’s Establishment

            7.3.2    Implications of Process Leading to Establishment of CLS Bank

7.3.3      Provision of Cross-Border Settlement Services by Central Banks and Bureaucracy Costs

7.4 Governance of Central Bank Payment and Settlement Systems

7.4.1        Potential for Conflict of Interest Between Provision of Payment and Settlement Systems and Supervisory Function

7.4.2      Possibility of Achieving Governance of Payment and Settlement System Through Competition

7.4.3      Bureaucracy Costs and Countermeasures of Central Bank Payment and Settlement Systems

7.5 Conclusion

 

8 Epilogue