The Ethics of Delegating Monetary Policy

The global financial crisis of 2007 and 2008 transformed monetary policy, forcing central bankers to move far beyond their pre-crisis instruments, goals, and expertise. In this article, I investigate these developments from a perspective of normative democratic theory. Against authors who reject central bank independence entirely, I argue that it should in principle be permissible for governments to delegate political choices to unelected experts. From a democratic perspective, what matters is whether the act of delegation serves the government’s ultimate economic policy aims. Although central bank independence limits the government’s control over monetary policy, it can also improve monetary policy and thereby help the government pursue its larger economic policies. I outline a moral framework for balancing these competing considerations; focusing on the case of the European Central Bank, I then argue for democratic reform of existing institutions.