Just Central Banking

ongoing

The recent financial crisis, and the ongoing ecological crisis, call for an urgent examination of the central banks’ place in society, both as a cause of harm and as a potential agent of justice. The central aim of this project is to determine what role central banks can play in the transition towards a more just and sustainable economy. First, this project will attempt to uncover what, if anything, is wrong with current central banking practices. The financial ethics literature is divided on whether their core problem is their lack of legitimacy, or their negative effects on justice and environmental sustainability. The first part of the project aims to show that all these problems stem from the unfair and inefficient division of political and epistemic labor between states, central banks, and commercial banks. Second, this project will delineate and defend potential reforms, which are able to improve the fairness and sustainability of central bank’s practices. The project will focus on new monetary policy instruments that central banks could use to target firms, banks, and citizens more directly. It will investigate how these policy tools can achieve a fairer balance of power between central banks, states, and commercial banks. In sum, by producing a unified theory that is able to account for the diversity of harms and benefits of central banking, this project aims to provide guidance on the ethical role of central banks and the necessary reforms of central banking.