South Africa: What Is the Real Purpose of Central Bankers in a Democracy?

opinion

What is the role of independent experts, such as central bankers, in a democracy? And what oversight should he or she be subject to?

First published in the Daily Maverick 168 weekly newspaper.

This was the question posed to the then president of the European Central Bank (ECB), Mario Draghi, in a lecture to the Kennedy School of Government at Harvard University in October 2013. Given the subsequent experiences of the past eight years of monetary experiments, it is a question worth re-asking.

Arch-Brexiteer Michael Gove, now Cabinet Office secretary, perhaps summed up an age of discontent with this self-anointed intellectual elite. His riposte - "I think the people of this country have had enough of experts" - has gone down in Tory infamy.

But the point is well made. After all, central bankers are mere unelected technocrats, albeit powerful ones. In addition, the traditional answer to what they busy their quotidian lives with - managing interest rates and money supply to keep inflation under control - now sounds quaintly old-worldly.

Instead, it seems they have become nothing short of self-appointed saviours of humanity and the planet. Former governor of the Bank of England Mervyn King recently complained about central...

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