ABSTRACT
This chapter focuses on the claim that central banking is a deeply political process; and that its political character does not solely arise from its story-telling dimension, but also from the how central banks imagine and conduct the relationship with financial institutions and with governments. Following Karl Niebyl, the political economy of central banking must pay equal attention to policy argumentation and institutional configurations. Central banks and monetary economists dedicated their energies to denying the importance of institutional relationships beyond the discursive realm of managing expectations, whether these relationships were to financial institutions or governments. The idea of discursive central banking is embedded not only in the corpus of mainstream monetary economic thought but also in recent contributions from anthropology and sociology. By privileging the 'story-telling' element, the discursive approach thus converges with the mainstream economics account of monetary policy in rendering the practices of central banking analytically invisible.
