Corporate Governance of Financial Stability

Financial stability has attracted the attention of central banks and policymakers for decades. The emphasis on the issue substantially increased after the global financial crisis. It led to new developments in the analytical field, as well as in the institutional area. This paper focuses on various aspects of institutional setups and compares two streams; one related to countries with separated supervision from the central bank, the other focusing on integrated supervision into the central bank. Institutional setups differ between these two regimes with the implications to internal corporate governance of central banks. We evaluate pros and cons of both systems and assess the impact on monetary policy and the inflation targeting framework.