Global financial crisis led to ‘cooperation paradox’ among world’s central banks, new CIGI report says

News Release

October 9, 2013

WATERLOO, Canada, and WASHINGTON, D.C. — October 9, 2013 — The nature of the global imbalances that contributed to the recent global financial crisis demonstrated the need for greater cooperation among the world’s central banks. But, paradoxically, the demands of added financial supervision that the crisis placed upon central banks made them less likely to engage in such cooperation, says a new paper from The Centre for International Governance Innovation (CIGI).

In International Cooperation and Central Banks, CIGI Senior Fellow and renowned economic historian Harold James answers a series of fundamental questions, while acknowledging that the purposes and functions of central banks have changed dramatically over time. These questions include: “Why do central banks attempt to cooperate with other central banks? Why should the respective political systems to which the central banks are ultimately accountable accept a cooperative strategy of the central banks? What overall gain do they expect to achieve as a result?”

“In general, tackling a major crisis that originates with ‘global imbalances’ and has transmission mechanisms that are cross-national seems prima facie to demand a more substantial and institutionalized cooperation,” James writes. “But in the aftermath of the recent financial crisis, visions of what central banks can and should do have changed profoundly. In particular, the demand that they should play a much more vigorous and pre-emptive role in financial supervision has made them more nationally focussed and less prone to cooperate.”

James concludes that central banks aim at some combination of the following four objectives, before explaining the type of cooperation and coordination required for each: price stability; maximum employment; exchange rate stability; and financial stability.

International Cooperation and Central Banks is the inaugural volume of the news series CIGI Essays on International Finance.

“The intent of the CIGI Essays on International Finance is to encourage productive dialogue and the building of common ground by providing a research-based, policy-relevant venue for high-level, cross-disciplinary contributions to the field of international finance and global financial governance,” writes Domenico Lombardi, Director of CIGI’s Global Economy Program, in his foreword to the inaugural volume.

For more information on International Cooperation and Central Banks, including a free PDF download, please visit:

In Washington, DC: Declan Kelly, Communications Specialist, CIGI
Tel: (+1) 519.573.2703, Email: [email protected]

Kevin Dias, Communications Specialist, CIGI                                                                                         
Tel: 519.885.2444, ext. 7238, Email: [email protected]

Harold James
joined CIGI as senior fellow in June 2013. He is Professor of History and International Affairs and the Claude and Lore Kelly Professor of European Studies at Princeton University. He was educated at Cambridge University and was a Fellow of Peterhouse for eight years before coming to Princeton University in 1986. His books include a study of the interwar depression in Germany, The German Slump (1986); an analysis of the changing character of national identity in Germany, A German Identity 1770-1990 (1989); and International Monetary Cooperation Since Bretton Woods (1996). He was also coauthor of a history of Deutsche Bank (1995), which won the Financial Times Global Business Book Award in 1996. More recently he has written The End of Globalization: Lessons from the Great Depression (2001), and Europe Reborn: A History 1914-2000 (2003); Family Capitalism (2006); The Roman Predicament: How the Rules of International Order Create the Politics of Empire (2006); and The Creation and Destruction of Value: The Globalization Cycle (2009). His study Making the European Monetary Union was published by Harvard University Press in the fall of 2012.  In 2004 he was awarded the Helmut Schmidt Prize for Economic History, and in 2005 the Ludwig Erhard Prize for writing about economics. His current work is concerned with the history of European monetary union.  He is director of the Center for European Politics and Society at Princeton.  He is also a senior Fellow of the Global Governance Programme at the European University Institute, and writes a monthly column for Project Syndicate. 

The Centre for International Governance Innovation (CIGI) is an independent, non-partisan think tank on international governance. Led by experienced practitioners and distinguished academics, CIGI supports research, forms networks, advances policy debate and generates ideas for multilateral governance improvements. Conducting an active agenda of research, events and publications, CIGI’s interdisciplinary work includes collaboration with policy, business and academic communities around the world. CIGI was founded in 2001 by Jim Balsillie, then co-CEO of Research In Motion (BlackBerry), and collaborates with and gratefully acknowledges support from a number of strategic partners, in particular the Government of Canada and the Government of Ontario. For more information, please visit


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