The Great Depression led to a need to rethink the principles of central banking, as much as it had led to the rethinking of economics in general, with the Keynesian Revolution at the forefront of the theoretical changes. This paper suggests that the role of the monetary authority as a fiscal agent of government and the abandonment of the view of the economy as self-regulated were the central changes in central banking in the center. In the periphery, the change in central banking was related to insulating the worst effects of balance of payments crises, while the use of capital controls became more common. The experiences of Marriner S. Eccles in the United States following the Great Depression, and Raúl Prebisch in Argentina in the 1930s and in Latin America in the 1940s are paradigmatic examples of those new tendencies in central banking at the time.

August 31, 2012.