Legal Foundations of International Monetary Stability

• Author: Thomas Laryea
• Position: Assistant General Counsel IMF Legal Department
• Pages: 53-

Page 53

Rosa Maria Lastra. Oxford University Press, Oxford, 2006, 600 pp., $199 (cloth).

ROSA Lastra has produced a highly insightful and readable work on international financial regulation. This book should appeal to lawyers, economists, financial sector specialists, policymakers, and, perhaps most of all, those interested in the intersection between these different disciplines. The book is well structured. The first part focuses on the national level and addresses developments in the monetary and regulatory functions of national central banks. The second part moves to the european regional level, analyzing the complex structure of the european System of Central Banks (eSCB), comprising the european Central Bank and the national central banks within the euro area. And the third part focuses on the international level, and in particular on the role of the IMF. The comparative analysis is enhanced by the common approach that Lastra applies to each part, starting by setting the historical context, then moving to an in-depth analysis of the institutional framework, and culminating with an assessment of the financial architecture in terms of financial supervision, regulation, and crisis management.

The limits of central bank power

Each part of the book is notable for its originality. In the first part, Lastra sets out boldly in recognizing that, while the central bank's statutory objectives include price stability, the bank is still carrying out a government function, even if it is a function that is best achieved through substantial (but ideally not complete) operational independence from political influence. This framing of the issue provides a fresh perspective on a subject that, in the hands of others, can become a stale debate on the seemingly irreconcilable tension between central bank independence and accountability. However, although the author strives to introduce the experience of developing and emerging market economies into some aspects of the discussion (for instance, when she touches on currency boards and banking crises), readers might benefit from a more systematic reference to the comparative practices of central banks in such economies.

"Lastra's work is sure to inform the debate on the evolving role of the IMF."

In the second part, Lastra describes how the eSCB operates within the european Union's constitutional and administrative context. Using...