The Federal Reserve and the ECB have been taking unprecedented steps to react to the financial impact of Covid-19. To frame the debate around the limits and legitimacy of central bankers’ extraordinary decisions, watch this Stigler Center mini-course with Sir Paul Tucker, who was deputy governor at the Bank of England during the 2008 global financial crisis. 

This is the first of three stand-alone, interrelated seminars with Sir Paul Tucker on his latest book Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State.

Sir Paul Tucker is a research fellow at the Harvard Kennedy School of Government and chair of the Systemic Risk Council. He previously served as deputy governor at the Bank of England and as a member of the G20 Financial Stability Board’s Steering Group, chairing a group on Too Big To Fail. In 2014, Tucker was knighted by Britain for his services to central banking.

Topics covered in the first part of Tucker’s mini-course:

  • The problem of unelected administrative power and (flawed) justifications for it
  • Credible commitment as the key ingredient to constraining administrative power
  • The need for insulation from quotidian politics and the democratic deficit in central banks
  • Why legitimacy matters
  • Tucker’s Principles for Delegation and related implications for antitrust and prudential supervision

Also, check this excerpt from Paul Tucker’s book on ProMarket

“My central argument is that if a democracy gives too much power to formally de-politicized technocrats, then almost inevitably they and the policy field they are responsible for become re-politicized. But that’s worse than not delegating, because it would be politicized policy in the hands of technocrats who we don’t elect.”

Or read our interview with Tucker:

I think you’re taking a great risk when you have an existential guarantor that is not a proper political body. The ECB needs to find a way to navigate its way out of that, and in a recent speech Mario Draghi started to address this point.

And a discussion between Kade Waldock and Luigi Zingales in this Capitalisn’t episode: