The Bank of England is Misusing its Fiscal Powers

"The Bank of England is Misusing its Fiscal Powers," headlines a February 29th Financial Times article by Daniela Gabor, Roger W. Ferguson, Jr., and Annette L. Nazareth Member in the School of Social Science and Economics Professor at Bristol University.

In the piece, Gabor argues that the U.K.'s central bank strategy to unwind quantitative easing is an illegitimate use of its fiscal powers. It pushes the costs of monetary policy mistakes onto the British taxpayers, who are forced to prop up commercial bank profits just as Britain endures the longest hit to living standards on record. The strategy, Gabor contends, is also undemocratic, as unelected technocrats controlling monetary-fiscal dynamics bind the hands of future governments of Britain, and especially constrain efforts to pursue more progressive or transformative policy agendas.

This year at the Institute, Gabor is writing a book on what she calls the Wall Street Consensus. This is a rapidly growing agreement in global and national policy circles that the return of the socially and ecologically transformative state is only possible if the state partners with institutional capital to make public ambitions "investible." This, she insists, takes shape as a project not only aimed at improving capital's profitability, size, or political power. Rather, it remakes the state into a derisking state, one that protects capital from the volatility of markets and hence the risks of investment itself.

Gabor's op-ed is available through the Financial Times.