How central bankers learned to love financialization: The Fed, the Bank, and the enlisting of unfettered markets in the conduct of monetary policy

Details

Serval ID
serval:BIB_6DF272844B8D
Type
Article: article from journal or magazin.
Collection
Publications
Title
How central bankers learned to love financialization: The Fed, the Bank, and the enlisting of unfettered markets in the conduct of monetary policy
Journal
Socio-Economic Review
Author(s)
Walter Timo, Wansleben Leon
ISSN
1475-1461
1475-147X
Publication state
Published
Issued date
21/03/2019
Language
english
Abstract
Central banks’ role in financialization has received increasing attention in recent years. These debates have predominantly revolved around authorities’ ‘benign neglect’ of asset bubbles, their deregulatory policies, and the safety nets they provide for speculative exuberance. Most analyses refer to the dominance of pro-market interests and ideas to explain these actions. The present article moves beyond these accounts by showing how an alignment between techniques of monetary governance and ‘unfettered’ financial markets can explain central banks’ endorsement of increasingly fragile structures of liquidity and their strategic ignorance towards growing amounts of debt. We analyze the processes of abstraction and formalization by which the ‘programmes’ and ‘technologies’ of monetary governance have been made compatible with the texture of contemporary finance; and we show how central banks’ attempts to make markets more amenable to their methods of policy implementation shaped new conduits for financial growth. As empirical cases, we discuss the Federal Reserve’s experiments with different policy frameworks in the 1980s and the Bank of England’s twisted path to inflation targeting from 1979 to 1997. These cases allow us to demonstrate that the infrastructural power of contemporary central banking is predicated on the same institutional foundations that have made financialization possible.
Create date
04/08/2020 12:09
Last modification date
05/08/2020 9:19
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