The Politics of Central Banks

The Politics of Central Banks

The Politics of Central Banks

The Politics of Central Banks

Synopsis

This book is a study of power. In particular, it is a study of governmental power in Britain and France. Its focus is the changing relationship between the government and the central bank in the two countries, and it examines the politics of this relationship since the time when the Bank of England and the Bank of France were first created. The book begins by considering the issue of governmental control generally. It then focuses on monetary policy making, and asks what has been the role of governments in this area and what freedom have central banks enjoyed? After a detailed historical analysis of this issue in Britain and France, the authors conclude by considering the likely role of the European Central Bank.

Excerpt

This is a study of executive power. More particularly, it is a study of executive power in Britain and France. More particularly still, it is a study of the government’s share of power in the domain of monetary policy in each of these two countries. It examines the relationship between the executive branch of government and the central bank. It examines the politics of government/central bank relations in Britain and France. Finally, it examines the extent to which members of the British and French core executives have been able to control the process of monetary policy making in their respective systems.

By virtue of this focus, the book is able to establish the scope of core executive influence over monetary policy in Britain and France. Moreover, it does so from the time when the Bank of England and the Bank of France were first created, in 1694 and 1800 respectively. Its main observations are threefold: it demonstrates that in these two countries this relationship has been subject to great variation over time; it argues that recently the politics of monetary policy, or the politics of core executive/central bank control, has become increasingly complex; and it asserts that, even in the contemporary context of increasingly independent central banks, long-standing issues concerning the political control of economic life are still as salient as ever.

The result is a study which examines government-central bank relations from a political science perspective. Its concern is for the politics of monetary policy. That said, it draws heavily upon some of the most recent literature on central banking in the discipline of economics. In particular, it adapts the methodology proposed by Alex Cukierman so as to measure the

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