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Samuel Zucker, Central bank capitalism: monetary policy in times of crisis, International Affairs, Volume 101, Issue 3, May 2025, Pages 1149–1151, https://doi.org/10.1093/ia/iiaf085
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For central banks, every financial crisis is an opportunity to expand their authority. This is the key takeaway from Joscha Wullweber's Central bank capitalism, where the author argues that central bank responses to the 2007–8 and 2020 crises made them indispensable to the capitalist system.
The primary role of central banks is to manage a country's money supply to keep inflation in check. Since the nineteenth century, however, central banks have also been responsible for stabilizing the financial system, working as a ‘lender of last resort’ that provides funds to banks during a panic (p. 19). During more recent crises, central banks have stepped in to help support shadow banks outside the traditional banking system. Wullweber argues that, whereas these interventions can stabilize the system, they also increase its reliance upon central banks. This presumption of central bank support has resulted in excessive risk-taking in the shadow-banking sector, further reinforcing the importance of central banks in times of crisis. According to the author, this paradigm—which he terms ‘laissez-faire with a safety net’—marks a significant transformation of the financial system (p. 155).
