The Changing Politics of Central Banking: A Legal Perspective
Central banks around the world emerged from the financial crisis in a curious situation. On the one hand, central banks were criticized because they had not been able to anticipate or prevent the crisis. On the other hand, central banks were called on to lead the way to economic recovery, using unprecedented means if necessary. We can, thus, tell two different, even opposite tales of central banks after the financial crisis. One of losing prominence, and the other of becoming the most powerful institution of our times. And both accounts are very true. How is that possible? This white paper reviews the legal literature in search of answers to this question. It starts by revisiting the issue of central-bank independence and looking at how the different branches of government now interact with central banks. The paper also explores the legal questions associated with central banks making use of unconventional tools.
Part Four of the Changing Politics of Central Banking Series
Mario Einaudi Center for International Studies
Central Banking; Global Financial Crisis; Global Finance Initiative; Monetary Policy