Central banking in subordinate financialized capitalism

Annina Kaltenbrunner and Juan Pablo Painceira

Chapter 6 in Central Banking, Monetary Policy, and Exchange Rates, 2026, pp 101-120 from Edward Elgar Publishing

Abstract: This chapter analyzes the role of central banks in subordinate financialized capitalism using the example of developing and emerging countries’ central bank interventions in and after the Covid shock. As it has been pointed out in the recent literature, central banks’ balance sheets in advanced economies have expanded to unprecedented size. Moreover, central banks have mutated from lenders of last resort to daily market makers. Their operations have become more market-based and entangled with the changing structures of financial systems. While there is by now quite some literature on the changing nature of central banks in financialized capitalism, much less attention has been paid to how and why central banks in emerging capitalist economies (ECEs) have changed. Painceira shows that central banks, given their role as pivot between the domestic and international spheres and guardians of international foreign exchange reserves, are very important for emerging economies. Thus, the central bank's role is not only to stabilize the domestic financial system but also to secure its safe and stable integration into global financial markets. This is particularly evident in subordinate finance spaces, where the power of global financial markets and the external imperative constrain monetary policymaking for domestic purposes. This chapter will extend this work and present a detailed empirical investigation of central bank operations in emerging economies in subordinate financialized capitalism. This involves both an investigation of their changing instruments, practices, and the effectiveness of their operations, and an investigation of the driving political economy factors behind such interventions and their variation between countries.

Keywords: Exchange Rates; Central Banking; Developing and Emerging Economies; Subordinate Financialization; International Financial Subordination; Marxist Political Economy (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035330041
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