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Banking on sovereignty: a genealogy of the European central bank’s independence

Lokdam, Hjalte Christian (2019) Banking on sovereignty: a genealogy of the European central bank’s independence. PhD thesis, London School of Economics and Political Science.

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This thesis analyses the idea of central bank independence, how it shaped the creation of the European Central Bank (ECB) and its management of the Euro Crisis. Based on a genealogical analysis, the thesis identifies the central normative commitments undergirding the insulation of monetary policy from ordinary democratic politics. It argues that central bank independence is an institutional response to the ‘problem of politics’ in relation to money: the problem that money is simultaneously founded on political authority and fundamentally threatened by the ordinary exercise of this authority. Central bank independence, then, constitutes a way of grounding the value of money politically while at the same time depoliticising its government. The form that central bank independence takes in practice, however, differs substantially, reflecting different ways of wedding the idea to broader constitutional imaginaries. Drawing comparisons to other major central banks, the thesis details the ECB’s form of independence and argues that the creation of the ECB not as a government agency (as the Fed) or a societal power on a par with the government (as the Bundesbank), but as a sovereign representative on a par with the Member States altered the constitutional make-up of the Eurozone. As the existential crisis of the euro shows, general tensions within central bank independence become irresolvable contradictions in this constitutional construct. Without institutional mechanisms for resolving them through ordinary politics, the emergency politics of the Euro Crisis placed the ECB centre-stage, engaged in the ‘higher lawmaking’ of changing the Eurozone’s constitution in order to save it. In doing so, however, the ECB redefined the meaning of its independence and reignited ‘the problem of politics’ by undermining its underlying social contract.

Item Type: Thesis (PhD)
Additional Information: © 2019 Hjalte Christian Lokdam
Library of Congress subject classification: H Social Sciences > HG Finance
J Political Science > JN Political institutions (Europe)
Sets: Departments > European Institute
Supervisor: White, Jonathan and Wilkinson, Michael

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