CENTRAL BANKING IN THE NEW ERA

This paper analyzes the evolution of central banking, and in particular the American experience of central banking. It provides projections for the future of central banking in the new era of post 2008. The paper initially demonstrates recent improvements in the financial and banking sectors, regulations and different measures of monetary and financial rules both in the USA and the rest of the advanced economies. Then, it claims institutions, such as central banks, will gain new objectives and more significance in this new era and thus will be given new roles, over time and along with the improvements and deepening in the financial system. The paper argues centuries long central bank evolution is not complete yet and that more objectives should be expected to come forward. In that line, there is need for a shift in the conventional policy measures. New trends in central banking such as the helicopter money, popular nominal GDP targeting regime and the retro developmental central banking are all critically analyzed. The paper provides a breakdown of financial development and central banking activities in a historical context and provides a rationale and a new basis for possible future innovations.