Theoretical perspectives on the new era of central banking

Central banking for a social-ecological transformation

“…the absence of coordination of monetary policy with fiscal policy or with environmental policy. The art of central banking is still widely conceptualized as purely technical and apolitical "science" although central banks are a public institution producing a fundamental public good: the payment system (Fontan et al, 2018;G. Vallet, 2019).…”

“…3 They increased wealth inequalities in favouring stocks and likely also real estate owners. The dogma of the ECB's market neutrality -purchasing financial assets according to their share in total market capitalization -led to distorting financing conditions of private firms towards carbon intensive activities (Dafermos et al, 2020;Fontan, 2017;Fontan et al, 2018;Matikainen et al, 2017;van 't Klooster and Fontan, 2019). This might potentially have slowed down the energy transition and goes contra policies decided by democratically elected government.…”

“…Fourth, depoliticization of central banks -real or apparent -exacerbates the lack of democratic legitimacy in an era where central banks have increasingly ventured into the political realm through their expanding powers after the 2007 crisis. The post-crisis action of central banks reflected a stronger sense of accountability before the financial industry rather than before citizens, as central banks' independence is seen as a credibility signal sent to financial markets (Fontan et al, 2018).…”

“…Political independency of central banks in spite of both the socio-political nature of money and the endogenous money supply is therefore tantamount at de facto dependency to the economic and financial system. This is reflected in the influence of the market constituency through the structural power exerted by financial markets over monetary policy and financial supervision (Fontan et al, 2018;G. Vallet, 2019).…”

The Limits of Transparency: Expert Knowledge and Meaningful Accountability in Central Banking

“…With the financial crises of the past years, however, the expansion of central bank powers raised concerns about legitimacy (see e.g. Dietsch 2019;Dietsch et al 2018;Fontan 2018;Jones and Matthijs 2019;van't Klooster 2018), accountability (Braun 2017;McNamara 2012) and self-empowerment (Heldt and Müller 2020), with criticism from populist parties, academics and civil society groups (Fontan et al 2018). They challenged the idea that we should blindly trust central bankers simply because they are 'experts' (Riles 2018).…”