Making Money

Making Money

An Insider's Perspective on Finance, Politics and Canada's Central Bank

Book - 2002
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"At the core of any central bank is a governmental licence to print money - an alchemy of such general wonder and fascination that there is no shortage of running commentary." from the Preface

Never a day goes by without matters of monetary policy being covered in the Canadian media. The value of our dollar, turmoil in global financial markets, economic growth vs. inflation, the possibility of a common North American currency. These are issues that constantly preoccupy our national psyche, and are particularly troublesome to a medium-sized, open economy that lives an uneasy coexistence next to the economic behemoth of the U.S.

Although much ink has been spilled over such matters, never before has it come from one so experienced as an insider in one of Canada's most influential, but least understood, institutions. John Crow's illustrious career at the Bank of Canada spanned twenty-one years, culminating in his seven-year term as Governor. In office through years of very controversial monetary policy, he is possibly one of the Bank's best-known governors.

Part memoir, part history, part analysis of major monetary policy issues, Making Money brings to life the inner workings and the politics of the Bank, an institution of central importance to the financial stability of the country. In such activities as determining interest rates and inflation targets, controlling the money supply, and even designing and issuing bank notes, the Bank has a profound effect on the daily life of every Canadian.

Making Money also sheds light on how the Bank functions more broadly in Canadian society: its relationship with the government in general and the Minister of Finance in particular, the crucial questions of its independence and accountability, how it is linked to larger public policy, and its involvement in federal-provincial issues as well as on the international stage.

Making Money offers a rare glimpse behind the curtain of Canada's central bank: what it is, what it does, how it functions, and the policy choices and constraints it struggles with. This book demystifies the arcane art of central banking, proving that the Bank of Canada matters in the life of every Canadian, and showing what it takes to have a good policy for money, whether in Canada or in any country."
-Foreword by Stanley Fischer
Vice Chairman, Citigroup, and President, Citigroup International; Formerly First Deputy Managing Director, IMF; Killian Professor and Head of Department of Economics, MIT; and Chief Economist, World Bank

"Whether or not the reader agrees with [John Crow's] view, by the end of the book he or she will have been forced to wrestle with the basic issues of monetary policy in the modern world, by someone who has thought clearly and deeply about the issues, who expresses himself simply and cogently, and who makes an impressive case for his views."
-From the Foreword, by Stanley Fischer

Publisher: Toronto : J. Wiley, 2002
ISBN: 9780470831809
Branch Call Number: 332.12 CRO
Characteristics: 256 p. ;,25 cm


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Jan 30, 2014

This is a wonderfully well written account of Mr. Crow’s 21 year career at the Bank of Canada, which culminated in his term as Governor from 1987 to 1994. Unfortunately it contains not a single table or chart in a book that should be littered with them. With Progressive Conservative Finance Minister Michael Wilson in February 1991, Governor Crow made the Bank of Canada an inflation targeting (IT)central bank. Governor Crow did not stand for a second term because the incoming Liberal Finance Minister Paul Martin insisted on dropping the reference to “price stability” in the December 1993 renewal agreement, even when Governor Crow offered the compromise proposal to consider a target rate of 1.5% as representing price stability. He notes that the IT regime has changed the relationship between the government and the central bank with regards to monetary policy, since it is now the government that essentially sets the inflation targets, and ”the hand that the government has played to date in setting targets has been biased towards propping inflation up.” Written in 2002, this has become even more obviously true since then. The research agenda established by BoC Governor Dodge and Conservative Finance Minister Flaherty to examine lowering the target rate of inflation finally led nowhere, since the 2011 inflation-target renewal agreement maintained the status quo. However with reductions in the upward measurement bias in the CPI, targeting a 2% rate now is much as the same as what targeting 2.1% or higher would have been in 1993, and by the end of the decade, with further improvements, it may well be equivalent to targeting 2.3%.

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