Do central banks promote social justice?

Clément FONTAN (CNRS, Sciences Po Grenoble)

The central bank, as one paradigmatic example of semi-autonomous body within the State bodies, has a moral contract with society. Indeed, the crucial social tasks performed by central banks since the Global Financial Crisis (GFC) indicate that they are part of the social institutions which form the basic structure of society (Rawls, 2001). This social status might come as a surprise for the observers of the central banks in the 1990’s when the dominant organizational form was the Central Banking Independency (CBI) template. The rationale behind CBI was that monetary policy was better left in the hands of independent experts in charge of a set of narrow and restricted objectives such as price stability.
In this communication, I analyze the formal and informal contract between contemporary Western societies and their respective central banks. My emphasis is on how the template for this contract that came to dominate the world of central banks in the early 1990s is now under stress given the new roles played by these organizations since the financial crisis of 2007-08.