Walter Bagehot on central bank governance: lessons from Lombard Street (1873)

Nesrine Bentemessek Kahia () and Rebeca Gomez Betancourt ()
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Nesrine Bentemessek Kahia: IRG - Institut de Recherche en Gestion - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - Université Gustave Eiffel, UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12
Rebeca Gomez Betancourt: TRIANGLE - Triangle : action, discours, pensée politique et économique - ENS de Lyon - École normale supérieure de Lyon - Université de Lyon - UL2 - Université Lumière - Lyon 2 - IEP Lyon - Sciences Po Lyon - Institut d'études politiques de Lyon - Université de Lyon - UJM - Université Jean Monnet - Saint-Étienne - CNRS - Centre National de la Recherche Scientifique

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Abstract: This article explores Walter Bagehot's (1826–1877) proposals for improvement of the governance of the Bank of England after the Charter Act (1844). In his book Lombard Street (Citation1873), Bagehot addresses the inherent dilemma faced by the Bank of England since its establishment in 1694. On one hand, it was a joint-stock bank with private shareholders, while on the other, it was entrusted with fundamental responsibilities for the public interest, including lending to the state, restructuring public debt, holding the nation's gold reserve, and managing liquidity crises. According to Bagehot, if the Bank of England succeeded in solving this dilemma, it was mainly thanks to the implementation of governance principles that he introduced and discussed. The contribution of this article is to highlight Bagehot's original proposals on central bank governance and their significance in reconciling the interests of the diverse stakeholders of the ‘Old Lady of Threadneedle'. Central bank governance in Bagehot is a topic that has not yet been discussed.

Keywords: corporate governance; central bank governance; stakeholders; conflicts of interest; Walter Bagehot; Lombard Street (search for similar items in EconPapers)
Date: 2024-10-21
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Published in European Journal of the History of Economic Thought, 2024, pp.1-22. ⟨10.1080/09672567.2024.2407326⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04753737

DOI: 10.1080/09672567.2024.2407326

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