Skip to main content

Cookies and Privacy

We use cookies to improve your experience on our website. To find out more, read our updated Cookie policy, Privacy policy and Terms & Conditions

Bank of Japan Governor Haruhiko Kuroda BEHROUZ MEHRI/AFP/Getty Images

The Central-Bank Song Remains the Same

Even as the world's major central banks face important transitions, the choices of their new leaders have reflected a desire for continuity. In terms of both policy and personnel, the new normal looks set to be mostly old wine in familiar bottles.

LONDON – The changing of the guard that is taking place at the systemically important central banks in 2018-2019 will mark the beginning of a new era of monetary policy. Who is likely to lead this transition to a “new normal”? More important, just how new will it really be?

In the decade since the global financial crisis, advanced-country central banks have adopted unprecedentedly active monetary policies. The Bank of Japan’s Haruhiko Kuroda and the European Central Bank’s Mario Draghi maintain such policies to this day, in order to stimulate economic activity and counter deflationary pressures. By contrast, the US Federal Reserve, beginning under former Chair Janet Yellen, and the Bank of England, under Mark Carney, have been laying the groundwork for policy “normalization.”

Another systemically important central bank, the People’s Bank of China, has focused not on monetary expansion, but on financial reform. Former PBOC Governor Zhou Xiaochuan built a strong reputation domestically and, perhaps more so, internationally during his record-setting 15-year tenure, owing to his gradual, steady, and effective approach. Although the PBOC’s lack of official independence means that his authority to set interest rates was constrained by the advice of the 15-member Monetary Policy Committee, this did not affect Zhou’s ability to put in place the foundations of a financial sector befitting the world’s largest economy.

We hope you're enjoying Project Syndicate.

To continue reading, subscribe now.


Get unlimited access to PS premium content, including in-depth commentaries, book reviews, exclusive interviews, On Point, the Big Picture, the PS Archive, and our annual year-ahead magazine.;

Handpicked to read next

  1. op_twliu1_XinhuaXiao Yijiu via Getty Images_wuhancoronavirushospitaldoctor Xinhua/Xiao Yijiu via Getty Images
    Free to read

    Witnessing Wuhan

    Tracy Wen Liu

    While Chinese authorities have been projecting an image of national triumph over the COVID-19 outbreak there, the doctors and nurses on the front lines tell a different story. Having lived through hell, they see little to celebrate, much to mourn, and reason to remain fearful.


Edit Newsletter Preferences