PRAGUE ECONOMIC PAPERS, 2, 2006 113 INSTITUTIONAL CONDITIONS OF MONETARY POLICY CONDUCT IN THE CZECH REPUBLIC

This paper tries to assess the conditions under which the CNB operates. Using a basic fra-mework suggested by Mishkin (2000), the aim is to find out whether the central bank is able to conduct high-quality monetary policy. First, general principles that central banks should follow to succeed in their pursuit of monetary goals are theoretically introduced. Then, the-se theoretical principles are looked at in the Czech context. Issues of the strictness and suitability of concrete monetary policy of the CNB will not be dealt with, rather institutional circumstances that potentially allow successful policy are at the centre of this paper. It is concluded that the CNB is functioning in a moderately good environment, but still much room for improvement does exist