The Changing and Growing Roles of Independent Central Banks Now Do Require a Reconsideration of Their Mandate

Goodhart, Charles; Lastra, Rosa M.

doi:10.1515/ael-2022-0097

Cited by 3 publications

(3 citation statements)

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“…Relatedly, Aglietta (2018) notes that central bank independence refers to these institutions' means rather than objectives, and that the latter cannot be separated from broader policies, which citizens entrust to representatives with the overarching goal of achieving social welfare. Goodhart and Lastra (2023) indicate that, in light of the environmental challenges discussed above but also other ones (geopolitics, COVID‐19, and so on), “the prior degree of separation between monetary and fiscal policy can no longer be maintained,” thereby calling for reconsidering the very mandate of central banks and the nature of its interactions with fiscal policy.…”

Section: View #3: the Evolutionary Role Of Central Banks Financial Su...mentioning

confidence: 99%

Three tales of central banking and financial supervision for the ecological transition

Oman,

Salin,

Svartzman

2024

WIREs Climate Change

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The academic literature and policy discussions on the role that central banks and financial supervisors (CBFS) should play in the ecological transition, almost nonexistent five years ago, have since grown at an impressive pace. This has resulted in a wide range of proposals that often generate debates and even misunderstandings, for lack of a coherent analytical framework. Against this backdrop, this article provides a comprehensive overview of the different theoretical backgrounds and worldviews that inform existing proposals, and discusses the challenges and debates they generate when assessed from other perspectives. We identify three main approaches, or three “tales” of central banking and financial supervision in the face of ecological threats: (i) one that argues that CBFS should focus on assessing the (so‐called “physical” and “transition”) risks that environmental issues pose to price and/or financial stability; (ii) one that places great emphasis on the ability of CBFS to help trigger systemic change, and thereby promotes proactive actions by CBFS to steer financial markets toward greening their activity beyond a risk‐based approach; (iii) one that sees CBFS transformation as necessary but part of broader institutional change that they cannot deliver on their own, thereby requiring an evolutionary perspective. Through this comprehensive literature review, this article seeks to provide a coherent framework through which future academic contributions and policy proposals can be better understood and assessed.This article is categorized under: Climate Economics > Economics and Climate Change Climate Economics > Economics of Mitigation

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Section: View #3: the Evolutionary Role Of Central Banks Financial Su...mentioning

confidence: 99%

Three tales of central banking and financial supervision for the ecological transition

Oman,

Salin,

Svartzman

2024

WIREs Climate Change

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“…The idea that the Bank was and ought to be treated as "operationally independent," with its decisions not being second-guessed or challenged for party political reasons was soon firmly established. In effect, the United Kingdom adopted a not untypical "narrow mandate" model of independence, in which one mandate, an inflation target of 2% was to be achieved by one instrument, the central lending rate (Balls et al, 2018;Buiter, 2016;Goodhart & Lastra, 2023).…”

Section: Central Bank Independence Politicization and Communicative S...mentioning

confidence: 99%

“…A broad range of commentators and experts have expressed a view that CBI can only be maintained through a narrow model based on inflation targeting. Moves away from the “narrow mandate model” are seen to produce a form of “overreach,” jeopardizing the entire institutional construct, in what might be termed an “independence in decline” thesis (Balls et al, 2018; Buiter, 2016; Goodhart & Lastra, 2018a, 2018b, 2023; Issing, 2018). New financial stability powers, for example, were, in some quarters, expected to draw central banks onto more politically contentious policy domains (Balls et al, 2018; Goodhart & Lastra, 2018b).…”

Section: Introductionmentioning

confidence: 99%

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

Baker,

Hindmoor,

McDaniel

2023

Regulation & Governance

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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.

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Legitimising green monetary policies: market liberalism, layered central banking, and the ECB’s ongoing discursive shift from environmental risks to price stability

Aguila,

Wullweber

2024

Journal of European Public Policy

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The Changing and Growing Roles of Independent Central Banks Now Do Require a Reconsideration of Their Mandate

Abstract: In this paper, we analyse why the changing and growing roles of independent Central Banks now do require a reconsideration of their mandate.

Cited by 3 publications

References 14 publications

Three tales of central banking and financial supervision for the ecological transition

Three tales of central banking and financial supervision for the ecological transition

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

Legitimising green monetary policies: market liberalism, layered central banking, and the ECB’s ongoing discursive shift from environmental risks to price stability

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