Abstract
Before the 2007–2008 global financial crisis, the vast majority of social scientists
were not paying much attention to the politics of central banking, despite
the fact that, since their creation, central banks have been pivotal institutions
between private financial institutions and public authorities (Singleton, 2010).
During the past decades, central banks acquired considerable independence
from public officials under the Central Bank Independence (CBI) template
(McNamara, 2002). Governments justified their decisions to delegate monetary
competences by relying on a narrow conception of monetary policy, in which
central bankers should only seek to control inflation and ignore the implications
of their policies on other economic issues such as financial stability or wealth
inequalities (Issing et al., 2001; Marcussen, 2009). Heterodox economists and
critical political economists opposed this view by declaring that monetary policy
is fundamentally political as it deals with complicated policy trade-offs,
which generates winners and losers (Epstein & Gintis, 1995; Forder, 2005).
However, until 2007, their concerns were very marginal and remained at the
fringes of the political debate. The vast majority of policy-makers, economists,
and central bankers themselves agreed on the fact that the CBI template was
the optimal institutional arrangement between fiscal and monetary authorities.