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http://www.itinerainstitute.org/en/library/itinera-publications-presentations/_paper/to-promote-financial-stability-wisely/
To promote financial stability wisely
05 August 2009
Ivan Van de Cloot
In the United States, they have to decide who will become the new governor of the Federal Reserve. Instead of focusing on the mental state of an individual and his attitude towards inflation, it would be better to build in structural mechanisms. So for example is stated in the contract of the central banker of New-Zealand, that he can be dismissed from the moment the control on inflation is lost. The issue of inflation-linked bonds by the public authorities could also be an efficient instrument. These are state bonds with interest payments depending on the inflation rate evolution. This demonstrates that public authorities are not going to choose the « nuclear » option to diminish their debt position by creating inflation.
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