Power, money, knowledge and the European Central Bank

Abstract

Among attempts to address the relationship between knowledge and democracy within an actual process of institutional design and evolution, the European Central Bank (ECB) is of special interest. The creation of the ECB rested on strong assumptions about knowledge and its independent use. Yet those assumptions were not devoid of democratic principle. They included claims about choices democracies could not make without delegating to those who can make independent use of specialised knowledge. It was also supposed that the development of an independent central bank within the European Union’s political and legal order could go further than single-democracy central banks towards maximising the role of knowledge and minimising the role of power in monetary decisions. Yet the Eurozone financial crisis undermined assumptions that the ECB could concentrate on a neutral use of specialised knowledge while largely avoiding the exercise of power. Moreover, even the supposedly neutral use of knowledge needs to be embedded in an overall democratic politics of public justification. That is as much an epistemic challenge as an institutional one. How can independent central banking be institutionally embedded in the EU’s multi-state and multi-democracy political order in ways that test its epistemic assumptions and make them safe for democracy?