Central banking and the infrastructural power of finance: the case of ECB support for repo and securitization markets

Braun, Benjamin

doi:10.1093/ser/mwy008

Cited by 227 publications

(141 citation statements)

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“…Liberalization and deregulation thus provided insufficient foundations for "neoliberal" policies to work (Konings 2011;Konings 2018;Walter and Wansleben 2019). Formalization thus also resulted from public policy makers trying to develop and enhance their market-based governing (Braun 2018).…”

Section: Money Market Expansion During the Liberalization-phase Of Fimentioning

confidence: 99%

Formal institution building in financialized capitalism: the case of repo markets

Wansleben

2020

Theor Soc

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Money markets are at the heart of financialized capitalism, as those markets that provide the funding liquidity needed for credit creation and leveraged trading. How have these markets evolved, grown, and become critical for larger financial flows? To answer this question, I distinguish an early period of financial globalization marked by regulatory arbitrage, offshoring, deregulation, and informal trading practices from a period of regime-consolidation marked by formal institutionalization. Concentrating on repo markets as the key funding sources for market-based banking, I demonstrate that new institutional arrangements for these markets were initiated by private sector associations, but supported and authorized by public authorities. Bond trader groups codified new contractual arrangements and these were validated via reforms of bankruptcy codes and changes in central banks' policy frameworks in the United States and European Union. Through these modifications and re-articulations in institutional conditions, transactions and large exposures on money markets became routine affairs-for shadow banking actors like money market funds as well as for commercial banks. The article concludes by discussing the continuity of regime-consolidation efforts after the transatlantic financial crisis and hypothesizes that they reveal "neopatrimonial" features.

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Section: Money Market Expansion During the Liberalization-phase Of Fimentioning

confidence: 99%

Formal institution building in financialized capitalism: the case of repo markets

Wansleben

2020

Theor Soc

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“…The EMI monitored the convergence of European economies, becoming allied to the Commission in promoting the integration project (Jabko, 1999). By 2000, the EMI had succeeded in convincing the European central banks to standardize monetary policy techniques (Braun, 2018). At the Madrid Summit, in December 1995, apart from making a membership overture to the post-socialist countries of Central and Eastern Europe, a date was also set for stage 3 of monetary union.…”

Section: -2000: the Roaring 90s And The Promise Of Globalizationmentioning

confidence: 99%

“…The FSAP directives allow use of government bonds as collateral, in "repo agreements," stimulating financial institutions to borrow cash to seek high returns on financial markets (Gabor & Ban, 2015). The resulting infrastructure allows the ECB to transmit monetary policy across the European territory through the inter-bank market (Braun, 2018), contributing to the erosion of "variety in capitalism" (Engelen, Konings, & Fernandez, 2010;Ward, Van Loon, & Wijburg, 2018) and the distinction between capital-based and bank-based financial systems (Hardie & Howarth, 2013). In the new modus operandi, the savviest banks engaged in "market-based banking" (idem), scouring the world for profit-generating assets to securitize into tradable financial products (Leyshon & Thrift, 2007;Wainwright, 2015) or trade in these securities.…”

Section: -2007: Europe Sinks In the Age Of Market-based Bankingmentioning

confidence: 99%

“…Meanwhile, the boldest of all post-crisis proposals, the financial transaction tax, has been dying a slow death (Gabor, 2016;Kalaitzake, 2017). ECB opposition hastens the death, as the tax would endanger the transmission of monetary policy, which reversed European entropy after Draghi started pumping liquidity into the system (Braun, 2018). The same jubilant representation of space that guided "1992," the Euro and the FSAP, which portrays financial integration as the only available medicine to the illness of alleged economic backwardness is back, projecting a financialized future.…”

Section: -2017: Business As Usual? a Preliminary Analysis Of Rementioning

confidence: 99%

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European Union financial integration, a geography perspective

Meeteren

2019

Geography Compass

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During the last 30 years, the financial sectors of the different European Union member states have gradually coalesced toward operating in a single, integrated, European financial space. This paper analyses financial integration by chronicling the process from Jacques Delors' single market project until the recent capital markets union. Drawing on geographical theories of space and scale, the paper collates the large interdisciplinary literature on financial integration with an emphasis on the work of financial geographers. The result is a distinctive geographical perspective on European financial integration intended to inform new rounds of empirical research.

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“…For example, the ECB tried to link its liquidity offers to banks with some forms of conditionality in order to incentivize them to provide more credit to the real economy. However, the "infrastructural power" of commercial banks (Braun, 2018) played in their favor: they refused to take the offered liquidity under such conditions and the ECB caved in and dropped the conditionality component (Fontan, 2018). In sum, central banks legitimacy is not only threatened by cultural factors (a lack of dialog and/or a clash between public and experts) but also, and maybe more importantly, by hard, power-related facts.…”

mentioning

confidence: 99%

Book Commentary on “Financial Citizenship: Experts, Publics, and the Politics of Central Banking” by Anne-Lise Riles

Fontan

2019

Accounting, Economics, and Law: A Convivium

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Financial Citizenship addresses the new era of central banking by focusing on the conflicts over central banking legitimacy in order to ultimately provide "a new theory and practice of legitimacy" for central bankers. In this article, I summarize first how Riles accounts for the "culture clash" between central bankers and the public, and how she aims to solve these tensions with the concept of financial citizenship. Second, I argue that the book has missed one of the main problematic dimension of contemporary central banking, which is the rise of private financial power. I also contend that the analysis of the "populist backlash" lacks empirical underpinning and that the concept of "financial citizenship" is unlikely to restore central banks' legitimacy.

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Central banking and the infrastructural power of finance: the case of ECB support for repo and securitization markets

Abstract: This is a pre-copyedited, author-produced version of an article published in SocioEconomic Review.

Cited by 227 publications

References 64 publications

Formal institution building in financialized capitalism: the case of repo markets

Formal institution building in financialized capitalism: the case of repo markets

European Union financial integration, a geography perspective

Book Commentary on “Financial Citizenship: Experts, Publics, and the Politics of Central Banking” by Anne-Lise Riles

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