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Crunch Time for Central Banks

In little more than a decade, the global financial crisis, climate change, and the COVID-19 pandemic have transformed the environment in which central banks operate – and public opinion is not on their side. Monetary policymakers who fail to respond to these shifts in sentiment will see their reputations suffer.

ZURICH – In Golden Fetters, his celebrated study of the collapse of the gold standard in the interwar period, the American economic historian Barry Eichengreen emphasized that important political and social changes, in particular the extension of the franchise, had made it impossible to maintain the system. Electorates were no longer willing to endure austerity if sticking to the gold standard required it.