Lessons from Europe for the study of international central bank cooperation

Abstract

Cooperation between central banks has been crucial for stabilising the international financial system during the Global Financial Crisis in 2008 and the COVID-19 crisis in 2020. For students of international political economy, understanding why and how central banks cooperate is thus a highly relevant concern. This doctoral dissertation studies central bank cooperation in Europe during and after the Global Financial Crisis. It is based on 25 elite interviews, original archival material and other primary and secondary sources. It reconstructs how central banks came to the decision to conclude credit lines with one another, engaged in Balance-of-Payments assistance programmes, and built new regional institutions to coordinate crisis management and macroprudential policy measures. It finds that central banks motivated their decisions to cooperate not merely on the expected consequences of their actions, but also on their perceptions of appropriateness. Bilateral cooperation was often motivated by norms, such as solidarity, rather than being based predominantly on self-interest; regional financial governance takes the form of inclusive deliberations and consensus-building, rather than clashing national interests. These findings support the conclusions that central banks’ agency, and the ideas that guide their behaviour, need to be better understood to grasp the dynamics of international monetary cooperation.