The Economics Show The limits of monetary policy, with Agustín Carstens
13 snips
Nov 14, 2025 
Agustín Carstens, former general manager of the Bank for International Settlements and ex-governor of the Bank of Mexico, shares insights on the challenges faced by central banks in maintaining trust amid political pressures. He discusses the limits of monetary policy post-2008 and the risks associated with multiple private money issuers. Carstens also critiques cryptocurrencies while highlighting the potential of central bank digital currencies. His thoughts on the necessity of modernization in central banking are both timely and thought-provoking, especially in our evolving financial landscape.
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Monetary Policy's Long Shadow
- Post-2008 and COVID interventions created a very liquid global monetary system that raises asset valuations and supports persistent inflationary pressures.
- Agustín Carstens warns central banks became too relied upon and cannot alone engineer sustainable growth without other policies.
Defend Central Bank Independence
- Defend central bank independence to sustain public trust in price and financial stability amid political pressure.
- Support institutions charged with keeping inflation under control to preserve monetary credibility.
Rebalance Macrostability Tools
- Strengthen financial regulation and supervision to limit risks from non-bank financial intermediation and leverage.
- Rebalance macro-stability tools so fiscal authorities and regulators share responsibility with central banks.
