Public Currency: Anthropological Labor in Central Banks

Abstract

This article examines the operation of an emerging monetary regime in which ‘mere words’, as Yellen, Janet (2013. ‘Communications in Monetary Policy.’ Speech presented at the Society of American Business Editors and Writers 50th Anniversary Conference, Washington, DC, April 4) recently noted, play a decisive role. Drawing on my field research in five central banks – the Reserve Bank of New Zealand, the Bundesbank, the Bank of England, the Riksbank, and the European Central Bank – I address how this regime, which I term a ‘public currency’, works in theory and practice and what is at stake in its regulation and management. At the heart of this regime is a far-reaching premise: the public must be broadly recruited to collaborate with central banks in achieving the ends of monetary policy, namely ‘stable prices and confidence in the currency’. I further argue that monetary policy is now being aligned overtly with public interests, interests that are not fully or necessarily reducible to the prerogatives of finance or the interests of financial markets.

KEYWORDS:

• central banks
• monetary policy
• anthropology of finance
• ethnography of expertise
• public currency

Acknowledgements

I have benefited from the generous and insightful comments of the two anonymous reviewers for this journal. I have sought to incorporate most, if not all, of their suggestions in his final version of the text and endnotes. I am of course solely responsible for any errors, omissions or misrepresentations.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes on contributor

Douglas R. Holmes teaches anthropology at the State University of New York at Binghamton. He is known primarily for an ethnographic trilogy exploring various aspects of political and cultural economy. Each book is based on extended field research in Europe: Cultural Disenchantments: Worker Peasantries in Northeast Italy (Princeton); Integral Europe: Fast-capitalism, Multiculturalism, Neo-fascism (Princeton); and Economy of Words: Communicative imperatives in Central banks (Chicago). He is also involved in an ongoing collaboration with George E. Marcus concerned with the re-functioning of ethnographic method for the exploration of cultures of expertise.

Notes

1. What that meant in practice at the time was pithily summarised by the diaristJohn Evelyn, who recorded the event 320 years ago in the following terms: ‘A publick bank … set up by Act of Parliament … for money to carry on the war’. The war in question was against France, and in return for the monies raised the Bank received both income and banking privileges: it was soon the only bank allowed to be constituted as a joint stock company, and had an effective monopoly of the note issue in the London area … That mission is timeless. The understanding of what we should do to achieve it has evolved. In 1694 promoting the good of the people meant financing a war with France. During the Great Moderation, it meant price stability. Today, reflecting the lessons of the ensuing financial crisis, it means maintaining both monetary and financial stability. (Carney 2014, 3–4)

2. Central Bankers are keenly aware too that monetary policy in general, and inflation-targeting in particular – their innovations – are fully implicated in the prehistory of the financial crisis. Faith in what Jordi Gali and Oliver Blanchard termed ‘divine coincidence’ – the consensus view that ‘strict inflation targeting is good, both for inflation, and for output’ – established the general policy conditions that fueled the catastrophic risk taking and the regulatory complacency that laid the groundwork for the crisis (Blanchard 2008, 10–11). Claudio Borio, director of research and statistics at the Bank of International Settlements, states concisely this tragic convergence: ‘Pre-crisis, the quintessential task of central banks was seen as quite straightforward: keep inflation within a tight range through control of a short- term interest rate, and everything else will take care of itself. Everything was simple, tidy, and cozy. Post-crisis, many certainties have gone. Price stability has proved no guarantee against major financial and macroeconomic instability’ (2011, 1). The intellectual failures of central banking weigh on the thinking of all the figures who are the subject of my research, and, of course, on my own thinking. There is much to be critical of, and fortunately we have a series of recently published works that do this labor in detail and with unusual clarity (see for example, Blinder 2013; Eichengreen 2015; Kirshner 2014; Langley 2015; Wolf 2014).

3. There is an enormous economic literature on ‘expectations’ encompassing what is one of the most important, if not revolutionary, academic developments in macroeconomics since World War II. The highly technical discussions concerning ‘rational’ and ‘adaptive’ expectations have had significant and lasting influence on central bank policy formulation and communications. The conceptualizations of expectations in my work has been aligned somewhat differently with the concepts of ‘reflexive subjects’ and a variant of economic performativity that is outlined below. Though I have sought to cast the role of expectations as an anthropological and linguistic phenomenon, there are strong, though undeveloped, affinities with its role in economics. I regret that I have not had the time to fully elaborate these areas of affinity and difference across disciplines. I have, however, made a very modest effort to reconcile the work of Robert Lucas, Jr. with these ideas from anthropology and linguistics (Holmes 2014a).

4. Rather than viewing this type of reciprocal modeling as a ‘feedback’ mechanism, I think that it is precisely the intricate counterpoint between micro and macro-narratives that sustains performativity in the wild bridging continually economic thought and action Callon (2007).

5. Svensson was particularly critical of the bank's decision to raise incrementally the repo rate from .25% to 2% between June 2010 and September 2011, a decision that Executive Board subsequently reversed in December 2011 (Sveriges Riksbank 2010, 2011a, 2011b).