Comment on The Future of Central Bank Cooperation - June 2005

DRAFT June 20, 2005 Comment on The Future of Central Bank Cooperation Beth A. Simmons Edwin M. Truman Senior Fellow Institute for International Economics thBIS 75 Anniversary Research Conference June 27-29, 2005 Basel, Switzerland Introduction “Futurology” is a challenging endeavor for both economists and political scientists, and Beth Simmons rises to the challenge for prognosticating on the future of central bank cooperation in a very informative and thought-provoking paper on the future of central bank cooperation. Her bottom line is that central bank cooperation will continue to adapt “shaped by the economic conditions” that central bankers encounter. In this comment, I will first provide a brief summary of the paper. I will next offer a few general comments. As is my responsibility, I offer some constructive criticisms with respect to empnasis and omissions. Finally, Simmons identifies relations with the central banks of Asia – their reserve holdings and the adjustment process – as the most immediate large challenge for central bankers, and I make a proposal for how G-20 central bankers should help address one aspect of that challenge by establishing an international foreign exchange diversification standard. Summary Simmons introduces her informative paper with an examination of trends in central bank players (governors) and their institutions. She concludes that they have become more homogenous both in background and in ...