Balance of power Central banks and the fate of democracies

Monnet (Paris School of Economics) explores what a central bank does (noting that this is in the context of its particular society) and how the central bank is connected to the welfare state, credit policy, and the banking and financial system. He does not argue against the independence of central banks; rather, he contends that the terms of central bank independence must be updated. The necessity of such change has become apparent in the aftermath of the financial crisis of 2008, which left central banks, in Monnet's view, in an "omniscient but ill-defined position" resulting in a gap between what central banks now do and the institutional framework that defines their responsibilities. In short, "central banks' monetary policies and power to create money must be subjected to democratic control" in an updated framework that allows for better coordination with other pillars of the welfare state. Monnet points to the danger to democracy in expecting too much from unelected institutions with an ill-defined balance of power, not just in terms of present activities of central banks but also looking to their future roles in the ecological transition, the price of public debt, and the circulation of cryptocurrencies. Monnet proposes reforms that would allow for better communication between the parliament and the central bank and the re-creation of a special connection between the central bank and citizens. Summing Up: Recommended. Advanced undergraduates through faculty. --Mary H. Lesser, Lenoir-Rhyne University

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. VERDICT A meticulously sourced, complex academic work that's essential for university libraries. It shows how central banks' ill-defined balance of power with little oversight can threaten democracies. Give to readers familiar with Joseph Stiglitz's Making Globalization Work, Morgan Ricks's The Money Problem, or Lev Menand's The Fed Unbound.--Dale Farris