Governing money: central banks in international and comparative political economy

This chapter examines the role of central banks within International Political Economy (IPE) and Comparative Political Economy (CPE), showing that, despite different analytical emphases, both traditions converge in treating central banks as fundamentally political institutions. While IPE has primarily focused on the global and transnational dimensions of central banking—such as monetary power, international cooperation, financial globalization, and the role of transnational epistemic communities—CPE has concentrated on domestic institutional design, ideological conflict, and the distributive consequences of monetary policy across different national contexts. The chapter argues that the common ground between IPE and CPE lies in recognizing the inherently distributive nature of monetary policy and the political struggles embedded in central bank mandates, independence, and policy choices. Central banks do not operate as neutral technocratic actors; rather, their institutional design and decisions reflect conflicts among societal groups and prevailing macroeconomic ideas. The second part of the chapter traces the institutional trajectory of central banks from the 1980s to the present, identifying two distinct phases. Between 1980 and 2007, central banks consolidated their independence and narrowed their mission to price stability, sustaining an image of technocratic neutrality and depoliticization. Since 2008, however, successive crises have expanded both the mandates and instruments of central banks to include financial stability, support for fiscal policy, employment, and climate-related objectives. This expansion has made the distributive consequences of monetary policy more visible and has contributed to increased politicization. The chapter concludes that central banking is subject to continuous political renegotiation. The return of inflation raises new questions about whether central banks can sustain their expanded role while preserving legitimacy in an increasingly contested political environment.