Skip to Content

Best Books on Central Banking and Monetary Policy

Best Books on Central Banking and Monetary Policy

Best Books on Central Banking and Monetary Policy

In these economic times, and with interest rates at an all-time low, it may be of particular interest to many to understand how monetary policy and the central bank work. 

The central bank plays a major role in our daily lives and affects nearly every aspect of our financial habits.  With that said, below we are going to take a look at the best books on central banking and monetary policy.

Before we continue, it may be helpful to understand what the central bank is.  A central bank, also known as a reserve bank or monetary authority, is an institution that manages and handles the currency and monetary policy of a particular state, country, or monetary union.  The central bank also oversees the commercial banking system. 

The central bank also controls the flow and supply of monetary supply and ensures a healthy level of inflation and regulatory practices.


Below we are going to take a look at the best books on central banking and monetary policy which can be purchased on Amazon.  Please note, the product links below include links from an Amazon Associates account.  This means that we at Ball Are Life receive a small commission on any purchases made from those links.  This is at no additional cost to you and helps to keep our site free, honest, and without bias or prejudice.

Understanding Central Banks

Where to Buy: Kindle or Hardcover

Issues related to central banks feature regularly in economic news coverage, and in times of economic or financial crisis, especially when a commercial bank is bailed out, they become the focus of the policy debate.

But what role do central banks play in a modern economy? How do central banks wield influence over the financial system and the broad economy? Through which channels does monetary policy impact macroeconomic fundamentals such as inflation or unemployment?

For example, how does a central bank alter the money supply? What are the benefits of central bank independence, and what are the up- and downsides of having a common currency? This book provides easily accessible answers to these and other questions associated with central banking.

The Only Game in Town

Where to Buy: Kindle or Hardcover or Paperback or Audiobook

Our current economic path is coming to an end. The signposts are all around us: sluggish growth, rising inequality, stubbornly high pockets of unemployment, and jittery financial markets, to name a few. Soon we will reach a fork in the road: One path leads to renewed growth, prosperity, and financial stability, the other to recession and market disorder.

In The Only Game in Town, El-Erian casts his gaze toward the future of the global economy and markets, outlining the choiceswe face both individually and collectively in an era of economic uncertainty and financial insecurity. Beginning with their response to the 2008 global crisis, El-Erian explains how and why our central banks became the critical policy actors—and, most important, why they cannot continue is this role alone.

They saved the financial system from collapse in 2008 and a multiyear economic depression but lack the tools to enable a return to high inclusive growth and durable financial stability. The time has come for a policy handoff, from a prolonged period of monetary policy experimentation to a strategy that better targets what ails economies and distorts the financial sector—before we stumble into another crisis.

The future, critically, is not predestined. It is up to us to decide where we will go from here as households, investors, companies, and governments. Using a mix of insights from economics, finance, and behavioral science, this book gives us the tools we need to properly understand this turning point, prepare for it, and come out of it stronger. A comprehensive, controversial look at the realities of our global economy and markets, The Only Game in Town is required reading for investors, policymakers, and anyone interested in the future.

Central Banks as Fiscal Players

Where to Buy: Kindle or Hardcover or Paperback

It is well known that the balance sheets of most major central banks significantly expanded in the aftermath of the financial crisis of 2007-2011, but the consequences of this expansion are not well understood. This book develops a unified framework to explain how and why central bank balance sheets have expanded and what this shift means for fiscal and monetary policy.

Buiter addresses a number of key issues in monetary economics and public finance, including how helicopter money works, when modern monetary theory makes sense, why the Eurosystem has a potentially fatal design flaw, why the fiscal theory of the price level is a fallacy and how to escape from the zero lower bound.

How the Fed Moves Markets

Where to Buy: Kindle or Hardcover

Central banks have a profound impact on financial markets, and investors struggle to keep informed about their complex policy decisions. Technological and financial developments have transformed the US Federal Reserve Bank from a financial black box into a vocal, increasingly transparent institution—and the result is such a wealth of textual data that clues to future policy decisions may be lost among the details.

This book presents a solution to this problem by keeping track of those details. Schnidman and MacMillan demonstrate how the latest advances in automated text analysis, combined with the precision of domain expertise, are the keys to understanding how central banks move markets with their words.

The authors outline a method to not only examine every piece of every central bank communication, but to do it in a way that is completely comprehensive and unbiased while quickly yielding hard, quantitative data that can be put to work in modern financial models.

Currencies, Capital, and Central Bank Balances

Where to Buy: Kindle or Hardcover

Drawing from their 2018 conference, the Hoover Institution brings together leading academics and monetary policy makers to share ideas about the practical issues facing central banks today. The expert contributors discuss U.S. monetary policy at individual central banks and reform of the international monetary and financial system.

The discussion is broken down into seven key areas:

1) International Rules of the Monetary Game;

2) Banking, Trade and the Making of the Dominant Currency;

3) Capital Flows, the IMF’s Institutional View and Alternatives;

4) Payments, Credit and Asset Prices;

5) Financial Stability, Regulations and the Balance Sheet;

6) The Future of the Central Bank Balance Sheet; and

7) Monetary Policy and Reform in Practice.

With in-depth discussions of the volatility of capital flows and exchange rates, and the use of balance sheet policy by central banks, they examine relevant research developments and debate policy options.