THE CENTRAL BANKS

An illuminating and intelligible introduction to central banks, the immensely influential institutions that constitute virtually a fourth branch of government in most industrial democracies. These banks' low-profile operations affect a wealth of workaday affairs, including how much home buyers pay for mortgages and what business travelers or tourists get for their money in foreign ports of call. In tracing how they evolved, Deane and Pringle (journalists turned consultants) offer a comprehensive if episodic guide to central banking from its origins in 17th-century Europe through the turbulent present, when the deregulated, high- tech international marketplace is at constant risk from, among other things, sporty new financial instruments like the hedging/trading vehicles known as derivatives. In the process of outlining the clubby vocation's past, present, and future, the authors address three salient issues. To begin with, they probe just why over the past couple of decades America's Federal Reserve, the Bank of England, the Bank of Japan, Germany's Bundesbank, and their lesser-light counterparts have focused on containing inflation rather than fostering economic growth that could curb domestic unemployment. They also examine the increasingly independent, albeit not quite autonomous, role played by central bankers in the brave new post-Soviet world order. Last but not least, the authors evaluate the extent to which monetary authorities (so called because they control the supplies of money in their own countries) have assumed supervisory responsibility for transnational capital markets. Along their anecdotal way, the authors are at pains to explain the complex means by which central bankers achieve their many-splintered ends in the face of frequent pressures from host-country politicians. Despite the authors' occasionally irritating penchant for chatty reportage underscoring their status as privileged observers with access to top-drawer insiders, a first-rate primer on central banking and why the lay public should care about it.