Will the populist wave engulf central banks? In the United Kingdom after Brexit and in the United States under the presidency of Donald Trump, fears arose about the independence of the respective central institutions. In fact, British Prime Minister Teresa May has repeatedly attacked the Bank of England for the "negative effects" of its monetary policy. While everyone remembers the scathing words used by Trump against the chairman of the Federal Reserve, Janet Yellen, during the election campaign. But after the vote on March 4, similar concerns are beginning to arise in Italy too.
In fact, what Di Maio economics consists of is not entirely understood, but we know for sure that a strong hostility is part of it, however not new in populist movements at all latitudes, towards finance, banks, national financial institutions and international. The pentastellati would like, among other things, to put the inspection activity of the Bank of Italy under the tutelage of the magistrates and every other day they are asking for its nationalisation. Matteo Salvini's League has shown a similar hostility towards finance and control bodies.
In a democratic system, based on the division of powers and the rule of checks and balances, the independence of the central bank from politics constitutes a barrier against the interference of the prince in the guidelines of monetary policy, the main purpose of which is to preserve financial stability and the value of savings. Independence is in turn balanced by the duty of accountability on the bank's operations by its top management. In truth, independence is balanced and at the same time strengthened by the exercise of accountability which, according to a recent essay by Charles Goodhart (president emeritus of the London School of Economics) and the British economist Rosa Lastro, constitutes one of the major barriers against populist threat.
The dissemination of information and the reporting, ex ante and ex post, of one's work and its motivations help to debunk the dangerous myth of a technocracy closed in its turris eburnea and contribute to strengthening the consensus of public opinion on its choices. With the growing dissemination of information and the multiplication of their transmission channels, accountability has also crossed the boundaries of parliamentary hearings and public appearances in the canonical offices and dates. For some time now, the main central bankers, from Jens Weidmann to Janet Yellen, have used the television medium, for example, to interact with the public. In Italy recently, the governor of the Bank of Italy, Ignazio Visco, breaking a consolidated tradition, appeared on the program Che tempo che fa by Fabio Fazio, while the general manager, Salvatore Rossi, was a guest on Otto e Mezzo on La7.
Some exponents of the ancien regime, who saw in the central banker a sort of separate and unattainable entity for most, turned up their noses at these initiatives which they judged to be detrimental to a tradition essentially founded on ex cathedra communication. Angelo De Mattia, a past in the Bank of Italy alongside the governor Antonio Fazio, for example stigmatized Rossi's appearance at Otto e Mezzo in the columns of Milano Finanza.
But times and languages change, vehicles of communication and institutions too. Independence and authority are not defended by closing themselves in a fort, but by intensifying accountability and transparency. The unsaid opens the door to suspicions. Face-to-face confrontation strengthens credibility.
According to Goodhart, central banks have become the scapegoat for the 2008 crisis and its consequences: low growth, rising inequality, impoverishment of the middle class, job disqualification.
In the absence of fiscal policies, for which politicians are responsible, the central bankers, as Allianz economist Mohamed El Enrian said, have become "the only game in town", i.e. the only actor capable of governing the crisis, from Ben Bernanke's Quantitative Easing to Mario Draghi's "whatever it takes". But despite having contributed to mitigating the impact of the shocks, the aura of power that surrounds them has paradoxically made them one of the main targets of the populist wave. If this is the state of the art, however, there must be only one answer: accountability, accountability, accountability.
