Central Bankers as Saviors?

Abstract

This chapter reviews what the role of the central banker is. For those who clung to the version of the gold standard professed in the Cunliffe Committee's reports, the question itself was provocative. The term “central banker” was anathema to their dogma of a monetary order governed by “rules” rather than “discretion.” In theory, the gold standard system needs no such actor. Montagu Norman rejected this view categorically. More than any of his predecessors, he recognized the pivotal role that a central banker can play in determining the direction of the economy. Thus, the answer to the question of the role of the central banker changed radically in this period, in large part due to a most unexpected confluence of outlook between John Maynard Keynes and Norman. Both would have disclaimed it, but Keynes and Norman agreed that central bankers could — and should — serve as “saviors.”