Which are the new frontiers in central banking? Which things have changed in the aftermath of the financial, economic and sovereign debt crisis? These are questions raised frequently by central bankers, academics and interested observers alike. There are quite a few areas to cover in answering...

This paper uses a formal model of a bank supervisor to derive policy implications on the optimal institutional arrangements for effective banking supervision. I find that bank supervisors should have political independence, and that independence should be complemented by legal protection and...