Why the monetary policy framework in advanced countries needs fundamental reform

Chris Sheridan, host of FS Insiders Podcast, recently interviewed William White about his most recent INET Working Paper. White reviewed the various shortcomings of the current framework; not least, how it has contributed to ever bigger credit bubbles and and ever higher stocks of both public and private debt. In spite of these developments, central banks showed no willingness to reassess either the framework itself or the set of false beliefs on which it rested. White expressed the hope that the conduct of monetary policy could be improved while maintaining the current institutional structure. However, he felt that it was also appropriate to assess seriously alternative and more radical options like the introduction of a “narrow money” regime. The widespread introduction of central bank digital currencies might facilitate such a change