Why Central Banks Lost the Public: Populism, Nationalism, and the Expert Myth
Book: Financial Citizenship: Experts, Publics, and the Politics of Central Banking
Author: Annelise Riles
ISBN: 9781501732737
Previous: Central Banks Are Cultures, Not Machines
Chapter 4 zooms out from inside the central bank to the relationship with the public. Riles argues that monetary policy only works when it fits shared cultural assumptions about money, nationhood, and who gets to decide.
The old myth said central banking is technical, so experts should decide. That myth is shattered. Populists are picking up the pieces.
Same policy, different countries, different results
The eurozone is Riles’s main case. Financial integration ran ahead of political and cultural integration. Stiglitz and Krugman warned the politics would eventually catch up. It did not catch up nicely.
The ECB is legally the most independent central bank around. Yet Carlo Tognato’s work shows it has less political room in a crisis than the old Bundesbank did. Why? Because the deutschmark and Bundesbank are woven into German postwar identity. The euro is not.
A rate decision that feels prudent in Frankfurt can feel like foreign imposition in Athens. Culture sets the real limits of policy.
National variation shows up everywhere. Nearly a third of young Japanese refuse pension payments, reflecting deep distrust in government. That is a culturally specific financial breakdown. It would not play out the same way in Brazil or Canada.
Populism and finance
After 2008, central banks became populist targets. Audit the Fed. Occupy Wall Street. Attacks on Mark Carney in the UK.
Research by Funke, Schularick, and Trebesch across 154 years and 20 European economies found that after financial crises, far-right parties gain about 30% more vote share, often blaming minorities or foreigners.
Riles connects this to a wider expert crisis. Distrust of central bankers sits inside declining faith in doctors, professors, journalists, and scientists.
The bridge metaphor
Building a bridge is political. Choosing materials is technical. For decades, we put central banking in the technical box. Experts decide what is best for everyone.
But when the bridge is the whole economy, “technical” choices feel moral and political. Ordinary people were always right to sense that. They just lacked a better vocabulary than partisan rage.
When the myth breaks, it stays broken
Riles uses Douglas MacArthur’s staged photo with the Japanese emperor after WWII. The tiny emperor beside towering MacArthur showed he was “just an ordinary man.” Once a foundational myth is destroyed, you cannot fully restore it. Faith must be constantly redefended.
Central banks helped break their own myth. Crisis interventions (swap lines bailing out foreign banks, opaque tools, weak recoveries for ordinary workers) had cultural effects separate from their economic rationale.
Breitbart’s Fed coverage captures the mood. Comparing Fed statements to Macbeth: “a tale told by an idiot, full of sound and fury, signifying nothing.” Next time, the piece warned, people might pick up “pitch forks in lieu of ballots.”
Nationalism meets global money
Trump and Abe campaigned as nationalists promising to bend central banks to national agendas. Brexit rhetoric targeted faceless Brussels bureaucrats, with the ECB as symbol.
The irony: central banks historically financed nationalist projects and wars. They are both engines of nationalism and targets of nationalist anger.
Draghi’s speeches, analyzed by Doug Holmes, read as nation-building rhetoric for a pan-European identity, not just rate announcements. Monetary policy shapes culture, not just interest rates.
My take
This is the chapter that made me stop treating populism as a sideshow.
Riles is not saying every Fed critic is right. She is saying the expert-public contract failed before the critics showed up. When stimulus defies mainstream theory and markets barely respond, public doubt hardens. When bailouts help banks while households struggle, people notice.
The MacArthur analogy is brutal and accurate. Once you see the Fed as a political actor, “we don’t discuss politics at our meetings” sounds like denial, not reassurance.
I also think about selective expertise in daily life. People reject macroeconomists but still trust their mechanic. Central banks are different because they touch identity (what is our money? who are we as a nation?) not just a broken carburetor.
What this sets up
Chapters 1 through 4 diagnose the problem. Chapter 5 starts proposing fixes: financial citizenship and a new legitimacy narrative.
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