Book Review: Making a Modern Central Bank by Harold James – IMF F&D
Source details
- Canonical URL
- Book Review: Making a Modern Central Bank by Harold James – IMF F&D
Other formats
Bibliographic details
- Authors: PAUL TUCKER
- Published: December 1, 2020
Overview
- Reviewer: PAUL TUCKER, author of Unelected Power; worked at the Bank of England from 1980 to 2013.
- Publication: F&D Magazine; Chasing Stability; December 2020.
- Reviewed work: Harold James, Cambridge University Press, Cambridge, UK, 2020, 350 pp., $110.
- Scope of the book: covers the quarter century from 1979 to 2003, focusing on the Bank of England’s institutional transformation culminating in regained independence in 1997.
Main themes and narrative
- Historical trajectory:
- 20th century arc summarized as: from great power before the 1930s, to decades sidelined as the Treasury’s operational branch, through reacquired authority during the late 1970s and 1980s, and finally back to insulation from quotidian politics by 1997.
- Three territories traversed by the book:
- history of the economy and policy;
- history of the institution;
- history of the organization.
- Central theme: how internal change and debate within the Bank paved the way for institutional reform and eventual independence.
Institutional and personnel developments
- Key figures noted:
- Gordon Richardson: reestablished gubernatorial authority.
- Robin Leigh-Pemberton: assembled and nurtured a world-class team (including Andrew Crockett).
- Eddie George and Mervyn King: delivered the strategic transformation of the Bank’s capabilities.
- Andrew Crockett: later head of the Bank for International Settlements.
- Paul Tucker: reviewer and former Bank insider (private secretary to the governor at one point).
- Anecdotes and internal politics:
- Whitehall intensely resisted Eddie George becoming deputy governor, conceding only with the proviso that it was "not a route to the top" (message delivered via Paul Tucker).
Policy, supervision, and outcomes
- Monetary institutional change:
- The Bank of England regained independence in 1997.
- The book documents the transition from Treasury-dominated operational role to insulated, judgment-based central banking.
- Banking supervision evolution:
- A judgment-based banking supervision system that had maintained systemic stability gave way, after a series of noisy idiosyncratic failures (JMB, BCCI, Barings), to a regulatory regime outside the central bank.
- That shift "ended in systemic collapse" (implicit reference to later events culminating in and after the 2008 crisis).
- Unresolved institutional struggles:
- The reviewer notes a decade-and-a-half-long internal struggle over the Bank’s role in financial stability, which reached its (current) conclusion only after the 2008 crisis.
Strengths and limitations identified by the reviewer
- Strengths:
- Rich and perceptive account of the Bank of England–centered story of British economic policy in the late 20th century.
- Clear depiction of policy initiatives, setbacks, and reforms.
- Effective exposition of how internal change enabled institutional reform and independence.
- Limitations:
- Less coverage of personal rivalries and perspectives that drove institutional progress; "we learn less about the personal rivalries and perspectives."
- Limited "parade’s color"—the book gives less sense of the interpersonal color and internal tensions.
- Calls for further work: groundwork laid for a "political-cum-sociological study" of deeper stories around institutional renewal.
Takeaways and implications
- The Bank’s modernization was driven by incremental internal change and debate across 1979–2003, enabling political decisionmakers to grant independence in 1997.
- The transformations prioritized stability over fashion; the reviewer emphasizes that the generations who refashioned the Bank were "not chasing fashion, but stability."
- The reviewer endorses the book as essential reading for those interested in:
- Treasury-led British macroeconomic policy during the 1980s and its gradual redemption during the 1990s.
- The shift in banking supervision from a central-bank-centered, judgment-based system to external regulatory arrangements and the consequences thereof.
Paul Tucker review in F&D Magazine, December 2020.
Content in this bundle
- استعراض الكتب
- Book Review: Making a Modern Central Bank by Harold James – IMF F&D
- En busca de la estabilidad
- Poursuite de la stabilité
- Книжное обозрение – Финансы и развитие – декабрь 2020 года
- 打造现代化的中央银行：英格兰银行，1979-2003 - 书评 - 金融与发展 - 国际货币基金组织季刊