Ethics and Morals in Central Banking — Do They Exist, Do They Matter?

Abstract

Money and interest rates have always been discussed in an ethical and moral context. For a long time charging interest was considered disreputable, and at times liable to hard secular and ecclesiastical punishment. The second Lateran Council, for example, decided in 1139:

Furthermore, we condemn that practice accounted despicable and blameworthy by divine and human laws, denounced by Scripture in the Old and New Testaments, namely, the ferocious greed of usurers; and we sever them from every comfort of the church, forbidding any archbishop or bishop, or an abbot of any order whatever or anyone in clerical orders, to dare to receive usurers, unless they do so with extreme caution; but let them be held infamous throughout their whole lives and, unless they repent, be deprived of a Christian burial.¹

My first approach to this topic is Ethik der Notenbankpolitik — Moral der Notenbanker (‘Ethics of central bank policy, morals of central bankers’) in H. Hesse and O. Issing (eds) (1994) Geld und Moral (Money and Morals) Munich: Verlag Vahler: I would like to thank Geoffrey E. Wood for valuable suggestions. This lecture was delivered at City University, London on 23 November 1995.