The Democratic Dangers of Central Bank Planning

Eric Monnet makes the case that central banks should introduce welfare-oriented credit policies and suggests legitimating these new powers through the establishment of deliberative credit councils. In this article, I argue that Monnet fails to consider how his model of central bank planning might insulate rather than democratize central banking. With low trust in experts and no society-wide consensus about how best to respond to wicked problems such as climate change, the principal danger is that Monnet’s credit councils may allow political actors to pursue agendas they do not feel they can get past electorates. Indeed, political actors may see shaping central banks’ credit policies as preferable to engaging the contentious fiscal policy domain precisely because the effects of credit policies cannot be easily held to account by voters. I suggest that credit councils are unlikely to provide a democratic channel for redressing these problems because they will inevitably privilege the voices of experts from the financial sector, industry, and (non-)governmental organisations – a de facto epistocracy – over the lay publics subject to their decisions.