Central Banking in Uncharted Waters

Abstract

Since the beginning of the financial crisis, central banks have been playing a preeminent role in the public authorities’ answer to the financial markets’ pressures. Indeed, they have been, by far, exceeding their traditional functions of lender of last resort and are now often acting beyond the limits of their mandates. As such, they are not anymore the independent technocratic institutions that have been isolated from political authority from the 80’s onward. We invite contributors to address some of the following topics. • The “independence” of central banks. Since their creation, central banks have been located at the interface between nation-states and financial markets; their degree of autonomy towards these two entities has been fluctuating during their entire history. The interconnectedness of socio-economic systems might have had a third dimension to the central banking map. Consequently what degree of autonomy (and power) central banks have towards states, markets and other central banks in the post-Lehmann Brothers era? • The normative implications of monetary policy. In order to answer to financial markets’ instability, central banks have been implementing “unconventional monetary tools”, in other words they have been substituting regular markets’ mechanisms in order to ensure their liquidity. Yet, the consequences of these monetary policies are yet unknown: who do they benefit at the end of the channels of transmission? Do they challenge deflationary risks or are they fuelling liquidity traps? • Central banks as financial supervisors. Many central banks such as the Fed or the ECB have gained new supervisory powers over financial markets since 2008. Yet, it is still unclear how and why they have been delegated these new competences. Furthermore, the risks of this delegation have not yet been addressed: is this concentration of power within central banks amplifying risks of regulatory capture by the interests of financial private sector?

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