Regulating Central Banking: Between Expertise-Based Governance and Democratic Oversight

Who regulates central banking in contemporary democracies—that is, the complex and evolving configuration of institutions responsible for monetary and financial governance? While parliaments and constitutional bodies are formally positioned as the primary sources of authority, the regulation of central banking cannot be reduced to legislative control alone. Executives play a critical role in shaping, recalibrating, and at times expanding central bank mandates, while central banks themselves engage in significant forms of self-regulation through the definition of internal rules, operational frameworks, and interpretive practices. Regulation thus emerges as a multilayered and dynamic process rather than a singular legal act. From a regulatory governance perspective, the regulation of central banking structures is about how technocratic authority is exercised, coordinated, and justified within democratic systems. Regulatory regimes define not only who decides, but also how decisions are made, reviewed, and legitimized in the absence of direct electoral accountability, including which values are prioritized and highlighted. These regimes can be analytically decomposed into several interrelated dimensions. First, they establish the institutional conditions of independence and control, including rules on appointment, tenure, removal, and resourcing, which shape the autonomy and capacity of central banks and related institutions as regulatory actors. Second, they define regulatory objectives and permissible instruments, thereby determining the scope of discretion, risk management, and policy experimentation. Third, they organize the distribution of regulatory responsibilities across those institutions involved (central banks themselves, but also fiscal authorities, financial regulatory agencies, consumer finance protection bodies, treasury entities, etc.) specifying mechanisms of coordination, joint decision-making, and accountability that mediate between expertise-based governance and democratic oversight. Building on these dimensions, this paper develops a conceptual framework for analyzing central banking as a form of regulatory governance and democratic legitimation. We propose a set of ideal types of central banking regulation that capture variation in modes of authorization, coordination, and accountability across democratic systems. Drawing on selected country configurations as illustrative cases, we assess the adaptive capacity of these regimes to sustain democratic legitimacy under conditions of regulatory expansion and uncertainty, particularly in response to technological transformation and environmental risks, which increasingly challenge the traditional boundaries between monetary policy, financial regulation, and broader public policies. P9: Theoretical innovations in regulatory governance, chaired by Martin Lodge