Masters of the game: the power and social responsibility of central banks and central bankers in a democracy

Louis-Philippe Rochon and Guillaume Vallet

Chapter 7 in Central Banking, Monetary Policy and Social Responsibility, 2022, pp 136-158 from Edward Elgar Publishing

Abstract: This paper sheds light on an overlooked issue in economics, namely the social responsibility of central banks in a democracy. We consider central banks as institutions of power, and as such neither are they nor their policies neutral, in the sense that they are inevitable winners and losers. In this context, we explain why and how their power should be regulated and controlled by society. Specifically, we focus on the income distributive nature of monetary policy to demonstrate this assertion. From this, we explain that time is ripe to build a new framework for central banking aiming at improving central banks' social responsibility consistent with the spirit of a democratic system, and resting on new rules, new types of inner organization, and more broadly, an ethics of responsibility of a new kind.

Keywords: Economics and Finance (search for similar items in EconPapers)
Date: 2022
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Working Paper: Masters of the game: the power and social responsibility of central banks and central bankers in a democracy (2022)
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