ABSTRACT
The formulation of monetary policy by two centres of expertise constitutes the norm in all capitalist countries and gives rise to advantages and disadvantages. The existence of two, parallel decision-making centres might improve the execution of policy to a greater extent than in an overcentralized system which, by its constitution, possibly lacks institutional safeguards against the taking of unduly biased decisions. It should be borne in mind that ministry of finance officials, by the very nature of their institution and its position within the state's administration, feel more responsible for implementing fiscal policy as opposed to securing the goals of monetary policy. Therefore, during periods of budget deficits, these civil servants might be more inclined to give a higher priority to the aims indicated by budgetary expenditure than to maintaining fiscal stability as the appropriate domestic context for the currency. Consequently, the ministry of finance may attempt, and on more than one occasion, to finance state expenditures, not covered by regular budget revenues, through issuing additional currency. For their part, central bank officials place considerably more emphasis on maintaining a stable currency because the central bank, again by its very nature, approaches macro-economic policy primarily from its monetary aspect as opposed to the goals indicated by state expenditure. It should also be remembered that the innate interests of the two centres formulating and managing monetary policy may differ, which is why each strives to secure a strong overall position - to enable the execution of that policy which its officials consider the most appropriate.
