central banking
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In any functional democratic system, some decisions are left to experts (who may be overseen indirectly by the people), while others are directly in the hands of the people. How to allocate these decision rights is a persistent problem in democratic theory. This chapter argues that competence is a crucial criterion in deciding the question of who decides. Further, part of the solution to the persistent pathologies of democracy is to reduce the sphere of politics and also the sphere of political control. Certain issues, such as trade policy, immigration policy, central banking interest rates, who serves as district attorney or judge, and various kinds of regulation, should be kept out of democracy’s hands—for everybody’s own good.

As the economic and financial crises of the last decade have highlighted, monetary issues sit at the heart of nearly every major political debate and policy issue in the world economy today. This makes the study of the politics of money perhaps the single most important topic in International Political Economy (IPE). This article surveys the IPE literature on money over the last two decades, highlighting outstanding scholarship on the political economy of central banking, exchange rates, and the international monetary system, as well as the persistent problem of “non-engagement” between scholars of different theoretical and methodological perspectives. In taking stock of the field, the article seeks to identify the many important contributions of each camp, to note outstanding work and scholars that have recently begun to bridge this gap, and to highlight key empirical and theoretical topics where further constructive engagement would enrich our understanding of the politics of money.

This paper presents a critical analysis of the stance taken on inequality by two central banks since 2015: the Bank of Canada (BoC) and the Federal Reserve (Fed). The analysis is informed by a computer-assisted discourse analysis of how central bankers from the two institutions position themselves when it comes to issues of inequality. We observe that the position on inequality of the two central banks has changed in recent years and continues to do so. We argue that the stance on inequality taken by the BoC and the Fed suffers from a number of both inconsistencies and shortcomings. On the one hand, the BoC and the Fed claim that monetary policy instruments are too blunt to target specific sectors of the economy. On the other hand, with their response to COVID-19, they have demonstrated that such targeting is possible after all.