Central banks as political institutions

Simone Deos and Fernanda Ultremare

Chapter 6 in Central Banking, Monetary Policy and Financial In/Stability, 2025, pp 101-118 from Edward Elgar Publishing

Abstract: This chapter delves into the critical reassessment of the role of central banks, advocating for a paradigm shift towards a more democratic and politically conscious monetary policy in the 21st century. By tracing the historical evolution of central banks from their inception to their current status, we unravel the deeply political nature of monetary policy and its intrinsic connection to power dynamics. Our analysis challenges the prevailing depoliticised and technocratic portrayal of central banks, highlighting the potential for monetary policy to be reimagined as a tool for democratic governance and public purpose. Drawing upon a political economy perspective, we propose alternative trajectories for central banking that address contemporary societal challenges, including financial instability, inequality, and environmental sustainability. Our recommendations emphasise the need for a democratic overhaul of monetary policy, suggesting that central banks should not only be accountable but also align their operations with broader societal goals.

Keywords: Central banks; Democratic oversight (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035302147
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