Of the State but Not the State: Placing Central Banks in the Global Financial Crisis

European Central Banking has changed significantly since the onset of the Global Financial Crisis. From austere technical monetary governors, Central Banks have transitioned towards deeply embedded financial and economic governors in the face of financial collapse. This transition raises the important question of “how do we conceptualise central banks in the 21st century?”. The political economy literature, due to its use of the state/market dichotomy, tends to situate Central Banks as part of “the state” and thus part of the state’s management of markets. In contrast, this paper presents a historical materialist reading of the ECB and BoE’s “extraordinary measures” between 2009-2014. The value-added of this approach is that it forefronts the social relations implicit in the, otherwise nebulous, structural relationship between the state, financial markets and money; which sits at the heart of the crisis, modern political economy and Central Banks themselves. On this reading, the paper argues that central banks are simultaneously ‘of the state but not the state’, a conclusion that is perhaps difficult to reconcile with a state-market dichotomy approach: ‘of the state’ as not only are central banks historically linked to states but they also perform important state-like roles as managers of monetary relations. In this sense, the ‘extraordinary measures’ of recent years are less extraordinary; they are natural extension of central banking. Yet ‘not the state’ points to the separate and often conflicting functions of Central Banks with other public institutions. Which explains why these ‘extraordinary measures’ are seen by political authorities as – on the one hand – the solution to the problems of stability and growth, whilst also – on the other – creating new challenges and problems for them.