Central Banks

Central banks are monetary authorities that regulate credit conditions in their respective countries or currency unions. They are often the fiscal agents of their national governments and, normally, have monopoly rights over the creation of legal tender, which is the money (i.e., coins and/or paper currency) that governments require residents to accept, when it is offered in payment of private and/or public debts. Controversy has surrounded central banks since the first one (Sweden’s Sveriges Riksbank) was founded in 1668. For centuries, they have evolved in their relationship to the state and financial markets and also in their governance and decision-making practices.

This entry addresses the major ethical issues, both internal and external, facing central banks. Overarching them is an implicit understanding that their success depends on ...