Balance of Power: Central Banks and the Fate of Democracies

Economist Monnet (Controlling Credit) continues his years of research on European financial systems, central banking, and the international monetary system in the 19th and 20th centuries with this impressive history of how central banks have become political superpowers of modern societies. The book focuses on the “super banks,” including the U.S. Federal Reserve and the European Central Bank, whose fundamental role is to implement national monetary policy, manage the currency of a country (or a group of countries), control the supply of money, act as social insurance for credit, and be a lender of last resort when financial systems turn sour. Monnet argues that central banks’ monetary policies should be subject to democratic control, as the banks’ current powers are too significant to be solely managed by independent authorities operating as inward-facing technocrats. The book provides reform proposals and recommendations that would harmonize central banks’ activities.