The Treasury and Central Bank – the Contingent Institutional

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The Treasury and Central Bank – the Contingent Institutional Approach → pragcap.com/the-treasury-and-cen … l-approach

Fiscal policy includes federal spending on goods and services, taxing, and debt issuance. Monetary policy includes the management of a central bank that issues money claims to commercial banks, the Treasury, and the public. A sovereign state is responsible for fiscal and monetary policy, executed through treasury and central banking operations respectively.

Fiscal and monetary systems do not exist without specific institutional design. In this regard, there is a difference between the facts of actual institutional design, and conceptual distillations that infer hypothetical design. Any overall view of actual treasury and central banking operations should be portrayed accurately in this respect. For example, there is a difference between the consolidated view of separate Treasury and central bank institutions as they actually operate, versus the view of an implied but unstated counterfactual in the sense of a unified institution. The actual operation of separate institutions is not at all the same as that implied by a unified counterfactual institution.

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