Daily Bell
April 20, 2012

Bank for International Settlements working paper studies price stability in Asia; concludes that monetary policy frameworks have been effective … A Bank for International Settlements working paper, released on April 18, lauds the monetary policy frameworks adopted by Asian central banks in achieving price stability since the Asian financial crisis. The paper’s author, Andrew Filardo, writes that the monetary policy frameworks adopted by Asian central banks since the financial crisis in the region have “worked well both to ensure price stability during the pre-crisis period and to navigate the shoals during the recent international financial crisis”. The author does, however, sound a note of caution, saying: “Existing monetary policy frameworks in Asia may be contributing to pro-cyclical inflation swings.” – Centralbank.com

Dominant Social Theme: Those Asian banks are swell. We could learn some lessons from them.

Free-Market Analysis: What kind of snow are they eating in Switzerland? Monopoly private/public central banking has been a failure wherever it has been tried.

The reason is very simple. Those who are in charge of printing money don’t ever know how much to print. As a result they always over-print. And this inflation eventually generates price inflation and then … ruin.

This is ineluctable. It will happen whether the power is held by private bankers or by “public” servants. The issue is monopoly money. If you have the power to print money and no one else does, you will inevitably abuse it. Here’s something from the “working paper” itself:

The international financial crisis that began in 2007 tested the integrity of monetary policy frameworks in Asia. The region was hit hard by the financial storms originating outside the region, especially in late 2008 and early 2009. Macroeconomic performance and Asian financial markets suffered. One important question to consider is the role domestic monetary policy played in Asia during this period. This paper attempts to assess this role, arguing that, on the whole, monetary frameworks adopted prior to the crisis served the region well. However, the recovery period has presented a number of price stability challenges which suggest a need to refine existing frameworks …

The Asian record during the crisis also highlights the importance of flexibly responding to economic and financial developments. Asian monetary policymakers could not completely shield themselves from the consequences of the problems in the West. At various points in the crisis, volatility spiked in the region and uncertainties about the future multiplied. The experience of the crisis illustrated that the Asian policy approach needs to change given the circumstances.

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