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Book Notes: The Money Trap

A Review by Michael Taylor

First published in Central Banking, Vol XXIII, Number i, August 2012, page 86.

Four insights in particular are worth mentioning:
First, Pringle is right to draw attention to the frequency of financial instability in the post-Bretton Woods world. Since the early 1980s there has been an average of one such episode every three years. The relationship between these episodes and the post-Bretton Woods monetary regime does warrant closer attention than it has so far received.
Second, Pringle makes the valid observation that academic and policy work on international monetary arrangements and on issues relating to the structure, functioning and regulation of the financial system have been separated and compartmentalised. He is right to call for more joined-up thinking about the interaction between exchange rate policies, monetary regimes and financial markets.
Third, Pringle is also on solid ground in questioning whether the current policy consensus in favour of inflation targeting combined with a macro-prudential overlay will be sufficient to tame the credit cycle.
Fourth, Pringle’s warning that the threat of financial repression and protectionism is growing and needs to be countered is well made.
Not least of this ambitious book’s merits is in sounding the alarm over this disturbing trend.

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Michael Taylor is a member of the Financial Stability Board Secretariat at the Bank of International Settlements and an internationally recognised authority on financial regulation. Previously Taylor worked with the Bank of England, the International Monetary Fund, the Hong Kong Monetary Authority and, most recently, the Central Bank of Bahrain, where he was advisor to the governor. Among his numerous publications are the seminal “Twin Peaks” paper (1995) and the textbook “Global Bank Regulation” (2010). He has also contributed to leading periodicals and specialist journals. He was educated at Oxford University, where he earned his doctorate.