Central Banking for the 21st Century: An American Perspective
21 Pages Posted: 11 May 2011
Date Written: December 28, 2010
Abstract
Central banks are peculiar institutions with one foot in the private sector and one foot in the government. In the United States, in particular, the central bank stands out as the extra-constitutional fourth branch of the federal government. It has considerable power which it can exercise without any significant formal review or interference from Congress, the President or any elected officials. It stands outside the American constitutional framework with its checks and balances on the exercise of power by Congress, the President and the judiciary. The Fed’s unique position has withstood repeated challenges to its legality and extra constitutional status and, like central banks around the world, it is viewed as an essential part of the policy framework.
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