Monetary Sovereignty

Monetary policy lies at the critical intersection between national sovereignty and economic interdependence, and it is central banks that exercise responsibility for the conduct of monetary policy. In this lucid and informative book, John Goodman illuminates both the role of the central banks and the complex politics of monetary policy in Germany, France, and Italy.Goodman traces the development and analyzes the operations of the Deutsche Bundesbank, the Banque de France, and the Banca d'Italia. Drawing on over one hundred and fifty interviews with central bankers, government ministers, and business executives, he examines the process of monetary policy-making in each country since the collapse of the Bretton Woods system of fixed exchange rates in 1973. Goodman shows how variation in the degree of central bank independence-the result of distinctive historical forces-creates persistent differences in monetary policy across countries. Financial interdependence, which has reached a high point in Europe, drives the convergence of national policies over time. Together, he argues, the dynamics of central bank independence and financial interdependence are shaping future prospects for monetary integration in the European Community.