Past Event

Unelected Power: the quest for legitimacy in central banking and the regulatory state

We are pleased to host the presentation of Paul Tucker's latest book.

Date: May 31, 2018, 12:30 pm Topic: Macroeconomic policy

audio & video recordings

presentation

Presentation by Paul Tucker

summary

Central bankers have emerged from the financial crisis as the third great pillar of unelected power alongside the judiciary and the military. They pull the regulatory and financial levers of our economic well-being, yet unlike democratically elected leaders, their power does not come directly from the people.

In this event, we hosted Paul Tucker who presented his latest book about unelected power and how it lays out the principles needed to ensure that central bankers, technocrats, regulators, and other agents of the administrative state remain stewards of the common good and do not become overmighty citizens.

During the Great Financial Crisis, the accumulation of powers within the Central Banks was reflected in the blurring of lines between fiscal and monetary policies and in the enhanced supervisory and regulatory powers. Prudential supervision, where accountability via oversight is impossible until failure, is an example of this “black box”.

How should we delegate power to independent agencies which are insulated from the daily politics of elected government? It was proposed that decisions should have a clear objective guided by public debate and that can be monitored and should be taken by one person one voter after deliberation to disperse power and to reveal disagreements.

Joanne Kellermann drew from her professional experience as a central banker, supervisor and founding member of the Single Resolution Board to reflect on the legitimacy of Central Banks’ action during the crisis. While the first priority back then was to act quickly, ex-post questions were raised not only by technocrats but also by civil society. Kellermann suggested that the setting up of the Banking Union and its two pillars could be set up against the book’s principles. It was noted that the current cross-border financial system and the shift from bailing-out to bailing-in is taking place precludes national control. Adding to this, resolution authorities are only visibly active to the public in times of crisis.

Jean-Pisani Ferry commented on the growing separation between policy and politics, which nowadays raises questions such as: “have we done enough?” and “have we done it in a carelessly?”. Current examples of WTO and Trump and even in Italy, where the constitutional and political spheres are separated, illustrate possible design flaws.

There are good reasons to delegate power – elected governments can fail and technocrats can follow their own agenda. The imperfect information problem is a constant. The question of “how” to delegate becomes more delicate, and there history tells us that we may have been careless so far. An exception is the way how the independence of the Bank of England was introduced. It was an elaborate reflection of how an independent agency can work and still be accountable and transparent, with the ultimate responsibility lying with the government. On the contrary, looking at European institutions, we see for instance that the Commission is partially accountable to the Parliament but has some independent powers, in what regards for instance competition policy.

The way we think about monetary policy has changed over the last decade. For example, policymakers are much more conscious of its distributional consequences. The relationship of savers with Central Banks has changed too – while in the past they were overall protected by the savers given the price stability mandate, nowadays the persistently low inflation rates negatively affect the Central Banks’ popularity. This political economy question will shape the future design of future institutions.

Schedule

May 31, 2018

12:30-13:00

Check in and lunch

13:00-13:20

Book presentation

Paul Tucker, Chair of the Systemic Risk Council and a Fellow at the Harvard Kennedy School of Government

13:20-14:00

Panel Discussion

Chair: Maria Demertzis, Deputy Director

Joanne Kellermann, Former Member, Single Resolution Board

Jean Pisani-Ferry, Senior Fellow

Paul Tucker, Chair of the Systemic Risk Council and a Fellow at the Harvard Kennedy School of Government

14:00-14:30

Q&A

14:30

End

Speakers

Maria Demertzis

Deputy Director

Joanne Kellermann

Former Member, Single Resolution Board

Jean Pisani-Ferry

Senior Fellow

Paul Tucker

Chair of the Systemic Risk Council and a Fellow at the Harvard Kennedy School of Government

Location & Contact

Bruegel, Rue de la Charité 33, 1210 Brussels

Matilda Sevon

[email protected]

Read article
 

External Publication

European Parliament

Don't let up - The EU needs to maintain high standards for its banking sector as the European economy emerges from the COVID-19 pandemic

In-depth analysis prepared for the European Parliament's Committee on Economic and Monetary Affairs (ECON).

By: Rebecca Christie and Monika Grzegorczyk Topic: Banking and capital markets, European Parliament Date: October 21, 2021
Read article More on this topic More by this author
 

Blog Post

Better sustainability data is still needed to accelerate the low-carbon transition in capital markets

Investors need more trustworthy sustainability data. Regulators should leave space for better products to emerge, while remaining alert to well-known patterns of misconduct in capital markets.

By: Alexander Lehmann Topic: Banking and capital markets Date: October 18, 2021
Read article
 

External Publication

European Parliament

Tailoring prudential policy to bank size: the application of proportionality in the US and euro area

In-depth analysis prepared for the European Parliament's Committee on Economic and Monetary Affairs (ECON).

By: Alexander Lehmann and Nicolas Véron Topic: Banking and capital markets, European Parliament, Macroeconomic policy Date: October 14, 2021
Read article More on this topic More by this author
 

External Publication

Brexit and European finance: Prolonged limbo

It will take longer than many had anticipated for the dust to settle on the post-Brexit financial landscape and its respective implications for the EU and the UK.

By: Nicolas Véron Topic: Banking and capital markets Date: September 24, 2021
Read about event
 

Past Event

Past Event

Financing for Pandemic Preparedness and Response

How can we better prepare for future pandemics? In this event, co-hosted by the Center for Global Development and Bruegel think tanks, speakers will present "A Global Deal for Our Pandemic Age", a report of the G20 High Level Independent Panel on Financing the Global Commons for Pandemic Preparedness and Response.

Speakers: Masood Ahmed, Victor J. Dzau, Amanda Glassman and Lawrence H. Summers Topic: Banking and capital markets, Global economy and trade Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: July 14, 2021
Read article More by this author
 

Blog Post

SPACs in the gap

Special-purpose acquisition vehicles could fill a gap in European equity markets and lure risk-averse investors off the sidelines.

By: Rebecca Christie Topic: Banking and capital markets, Macroeconomic policy Date: July 13, 2021
Read article More on this topic More by this author
 

Blog Post

The EU green bond standard: sensible implementation could define a new asset class

The proposed EU green bond standard will be less prone to ‘greenwashing’, and the widest possible set of issuers and jurisdictions should be encouraged to use the standard.

By: Alexander Lehmann Topic: Banking and capital markets Date: July 13, 2021
Read article More on this topic More by this author
 

Blog Post

Banks post-Brexit: regulatory divergence or parallel tracks?

Post-Brexit UK bank regulation is not likely to compromise on international standards, but will place greater emphasis on competition, making close UK-EU dialogue essential.

By: Alexander Lehmann Topic: Banking and capital markets Date: July 6, 2021
Read about event More on this topic
 

Past Event

Past Event

Multilateralism in banking regulation and supervision

This members-only event welcomes Carolyn Rogers Secretary General of the Basel Committee on Banking Supervision.

Speakers: Carolyn Rogers and Nicolas Véron Topic: Banking and capital markets Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 24, 2021
Read about event More on this topic
 

Past Event

Past Event

Prospects for improving securities and financial reporting oversight in the EU

This members-only event welcomes Eva Wim­mer, Head of the Directorate-General for Financial Market Policy at the German Federal Ministry of Finance, for a conversation with an invited audience.

Speakers: Nicolas Véron and Eva Wimmer Topic: Banking and capital markets Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: May 26, 2021
Read article More on this topic More by this author
 

Blog Post

Confronting the risks: corporate debt in the wake of the pandemic

As European economies emerge from lockdowns, it is becoming clearer that corporate debt has reached critical levels. A new French scheme, in which the state guarantees portfolios of subordinated debt, shows how financial support could be targeted better.

By: Alexander Lehmann Topic: Banking and capital markets Date: April 28, 2021
Read article
 

Blog Post

European governance

Urgent reform of the EU resolution framework is needed

In this blog, the authors argue that two aspects of the European resolution framework are particularly in need of reform – the bail-in regime and the resolution mechanism for cross-border banks – and propose a reform of both.

By: Mathias Dewatripont, Lucrezia Reichlin and André Sapir Topic: Banking and capital markets, European governance, Macroeconomic policy Date: April 16, 2021
Load more posts