For the Bank of England’s 1995 Central Bank Governors’ Symposium, Max Fry, Charles Goodhart and Alvaro Almeida (Fry, Goodhart and Almeida 1996) surveyed the objectives, activities and independence of central banks in developing countries. One striking finding was that developing countries suffered considerably higher inflation than the OECD countries. While the proximate cause was more rapid money growth, their work suggested a more fundamental cause was that developing country governments resorted to their central banks much more for deficit financing.
For the Bank of England’s 1996 Central Bank Governors’ Symposium, Max Fry was asked to investigate in more detail the ways in which governments finance their deficits. A book based on this work, ‘Emancipating the Banking System and Developing Markets for Government Debt’, is scheduled for publication in March 1997.
Developing voluntary domestic markets for government debt