The 2007-2010 Global Financial Crisis has reshuffled the cards for central banks throughout the world. In the wake of the biggest crisis since the Great Depression, this volume traces the evolution of modern central banking over the last fifty years. It takes in the inflationary chaos of the 1970s and the monetarist experiments of the 1980s, eventually leading to the New Monetary Consensus, which took shape in the 1990s and prevailed until 2007. The book then goes on to review the limitations placed on monetary policy in the aftermath of the global meltdown, arguing that the financial crisis has shaken the new monetary consensus.

In the aftermath of the worst crisis since the Great Depression, the book investigates the nature of present and future monetary policy. Is the Taylor rule still a satisfactory monetary precept for central bankers? Has the New Monetary Consensus been shaken by the Global Financial Crisis? What are the fundamental issues raised by the latter cataclysmic chain of events? How should central banks conceptualize monetary policy anew in a post-crisis scenario?

Existing books have dwelt extensively on the characteristics of the New Monetary Consensus, but few have cast light on its relevance in a post-crisis scenario. This book seeks to fill this gap, drawing on the lessons from five decades of contrasted theoretical approaches ranging from Keynesianism, monetarism, new classical macroeconomics, inflation targeting and more recently, pragmatic global crisis management.

Part I: Overview 1. The Global Financial Crisis: an unprecedented configuration for monetary policy PART II The inflationary chaos in the 1970s and the monetarist revolution 2. The shortcomings of macroeconomic policies in the 1960s 3. The inflationary chaos and the Keynesian retreat in the 1970s 4. The demise of the Bretton Woods exchange-rate system 5. The monetarist years (Reagan –Thatcher) PART III The new mantras of the 1990s 6. Transparency 7. Price stability 8. Credibility 9. Inflation targeting 10. A simple model of the monetary consensus with three equations PART IV The limitations placed on monetary policy after the Global Financial Crisis 11.The statutory missions of the Fed and the ECB 12. Unstable, unpredictable and uncoordinated exchange-rate movements 13. The zero bound on nominal interest rates and deflationary fears 14. Lessons from the Euro sovereign debt crisis PART V A few unavoidable issues for central banks in a post-crisis scenario 15. The interest-rate setting policy: going beyond the Taylor Rule 16. Asset prices and core inflation 17. Pro-growth policies and regulatory reform 18. Austerity measures versus growth: a post-crisis conundrum? 19. Revisiting the Theory of Optimum Currency Areas (Mundell, 1961) 20. The problematic issue of the US Dollar