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Sergio Rossi

Rossi presents the mainstream and conventional view that considers money to be ‘neutral’ on real magnitudes and attributes to monetary policy the single goal of price stability. The author then elaborates on monetary targeting/inflation targeting strategies, which have resulted in output and employment losses and have contributed to inflating credit bubbles that, eventually, led to financial crises of a systemic nature. Rossi recommends that monetary policy should aim at financial stability as well as higher employment, abandoning the dogma of central bank independence.

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Sergio Rossi

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Sergio Rossi

The origin of the 2008 financial crisis can be found in the architecture of domestic payment systems, which are also used for international settlements despite the purely accounting nature of bank money. This chapter will discuss the essential principles of the necessary reform of the current international payment system, which must ensure the emission of a purely scriptural money reserved for national central banks, for the final payment of all transactions involving two separate currency areas. Here we explain that only a supranational currency will guarantee national and international financial stability.

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Sergio Rossi

This chapter clarifies different points that are the backbone of the debate between horizontalists and structuralists. It first draws a clear-cut distinction between money and bank deposits in order to set the record straight as regards the working of a single-bank system. It then elaborates on the role of the central bank in a multi-bank system, to show that even central-bank money is always and everywhere an endogenous phenomenon, owing to the need of a means of final payment on the interbank market. On these grounds, it explains a central bank’s interest-rate determination, referring to the Canadian case, which is a very efficient system for interest-rate control.

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Sergio Rossi

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Sergio Rossi

This paper aims at investigating some neglected consequences of free capital mobility in the Euro area. The approach we use in this work is based on the book-keeping nature of money, which shows that capital – in the form of bank deposits – is mobile within a currency area but actually immobile between different monetary spaces. Within the Euro area both short- and long-term investments are directed into those economies where the return on investment is highest, a magnitude that is positively correlated with the rate of real growth. If so, then economic divergence might increase between member countries of the European Monetary Union (EMU), giving rise thereby to a higher rate of unemployment in those member countries that suffer from net capital outflows, to the benefit of some other countries in the same area.

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Sergio Rossi

This paper shows how a defective architecture for domestic and international payments has made it possible for banks to exploit the endogenous nature of money in a variety of purely speculative financial-market transactions that have led to the eruption of a global systemic crisis. I elaborate on a monetary–structural reform, which should make sure that no bank will any longer be in a position to blur the distinction between money and credit, as this confusion in the banks' books originates various asset bubbles as well as systemically important financial institutions, both of which are major contributors to making the system increasingly fragile as time goes by. This reform of domestic payment systems will not be enough to avoid so-called global imbalances at an international level. I therefore propose, in the spirit of Keynes, a structural reform of the international monetary system, arguing for the emission of a supranational money in settlement of every individual transaction between any two monetary spaces.

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Sergio Rossi

This paper argues that the negative interest rate adopted by the Swiss National Bank in 2015 has elicited a series of negative consequences across the Swiss economy. It has led an increasing number of agents to invest their savings in the real-estate market, whose prices have overheated, threatening the eruption of a housing crisis. It has also induced a number of financial institutions to turn to riskier businesses in an attempt to continue to earn some returns, thereby increasing financial fragility at systemic level. The paper suggests that a small Tobin tax on all Swiss-franc purchases may contribute to the support of domestic economic activities much better than negative rates of interest.