The Future of Money and Central Banking: Independence and Credibility against the Backdrop of Economic Crises, Technological Progress, and Climate Change

The role of central banks has changed. Since the financial crisis, many central banks have implemented quantitative easing measures – government bonds, corporate bonds or even stocks are bought with the aim to influence macroeconomic variables such as inflation, economic growth or the exchange rate. Some central banks have also taken on more tasks in the area of financial market supervision. There are also various arguments that central banks should play an active role in dealing with climate change. In addition, a technological change is taking place – which is discussed under keywords such as blockchain, cryptocurrencies or central bank digital currency, which is likely to change the financial world and also the central banks significantly. Since the outbreak of the COVID-19 pandemic, central banks in many countries have significantly expanded so-called unconventional monetary policy tools.

How will the role of central banks change in the coming years? How independent will they be from politics and will the understanding of independence change? I will be discussing questions like these in the coming months. As always, I’m open to suggestions.

I also recommend papers or books.

Here is a very interesting paper (free): Ed Balls, James Howat, and Anna Stansbury (2018): “Central Bank Independence Revisited: After the financial crisis, what should a model central bank look like?“, M-RCBG Associate Working Paper No. 87.

Paul Tucker’s book on “Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State” is highly recommended. It can be ordered from Princeton University Press or amazon.

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