Performing central bank independence: The Bank of England's communicative financial stability strategy

Abstract

Central bank independence (CBI) has been one of the most significant regulatory state developments of the last three decades. Following the 2008 financial crisis, many central bank mandates were extended to include a responsibility for financial stability. Some commentators claim this jeopardizes CBI by drawing central banks into contested political issues that can impact financial stability, in what we term an independence in decline thesis. Through a detailed study of the Bank of England's financial stability communications employing the Comparative Agendas Project (CAP) codebook, we subject this independence in decline thesis to scrutiny. We show that since the extension of the Bank's mandate in 2011, Bank officials have discussed a wider range of more contentious policy issues. However, these communications appear to date to have largely reinforced the Bank's reputation for technical competence and political neutrality. In this sense, central bank “communicative agency” can be deployed to protect CBI performatively, while CBI can in turn be studied and understood as an ongoing communicative performance act. We find that repoliticization is a more contingent process than much central banking literature has allowed for, while financial stability communications are a potentially powerful regulatory instrument deserving of more scholarly attention.