Front and Back Covers,Volume 39, Number 4. August 2023

Front and back cover caption, volume 39 issue 4 CBDC'S BOTANICAL IMAGERY In the ever-evolving landscape of global finance, the Bank for International Settlements (BIS) has cultivated a botanical metaphor to illustrate the concept of central bank digital currency (CBDC). In this issue, Swartz & Westermeier explore this metaphor (illustrated here by Matthew Kurina), presenting a fascinating anthropological perspective on the intersection of technology, economy and imagination. The BIS's metaphorical ‘money tree’ positions the central bank as the sturdy trunk, providing stability and support to the financial ecosystem. The branches, representing various financial institutions, extend from this trunk, while the leaves, symbolizing the diverse forms of money, flourish at the periphery. This metaphor not only encapsulates the hierarchical structure of the financial system but also naturalizes the concept of CBDC, subtly implying its inevitability and organic integration into the existing monetary ecosystem. The BIS uses the ‘money flower’, another botanical metaphor, to classify the past, present and future forms of money. The petals of this flower represent different characteristics of money, such as whether it is digital or physical, centralized or decentralized. This metaphorical taxonomy provides a framework for understanding the evolution of money and the potential role of CBDCs in the future financial landscape. However, while visually appealing and conceptually insightful, these botanical metaphors also raise anthropological questions. They mask the sociopolitical implications of CBDCs, presenting them as natural phenomena rather than human-made constructs. This portrayal glosses over the potential power dynamics, control mechanisms and geopolitical tensions inherent in adopting CBDCs. As we stand at the precipice of a new era in digital currency, these metaphors serve as a reminder of the need for critical engagement with the narratives that shape our understanding of complex financial technologies. The ‘money tree’ and ‘money flower’ are not just symbols of financial evolution, but also tools of persuasion, framing our perception of the future of money. CULTURAL EVOLUTION IN THE AGE OF NFTs The Bored Ape Yacht Club (BAYC), an intriguing collection of algorithmically generated cartoon ape NFTs etched into the Ethereum blockchain, has not only sparked a cultural phenomenon but also inspired the first ever NFT-themed restaurant, Bored & Hungry, in Long Beach, California, USA. Why apes? A BAYC founder suggests it is a response to the existential ennui that follows the attainment of vast wealth through crypto investments. ‘Once you've achieved unimaginable wealth, what's next? You join a swamp club with a bunch of apes and embrace the unusual’. Or, you could always enjoy a burger. Yet, these seemingly whimsical endeavours are more than just a pastime for the crypto rich. NFTs signify a profound shift in the political discourse surrounding blockchain technology. They challenge the financialization of blockchain, aligning with a contemporary wave of anti-finance far-right populism and potentially offering an alternative to the prevailing capitalist democratic order. In this issue, Bill Maurer delves into the uneasy relationship between the concept of non-fungibility and anthropological theories of embedded or social economies. This tension, he suggests, could pave the way for a post-neoliberal future, one that is not rooted in finance but in regenerative models for future social worlds. From an anthropological perspective, the rise of NFTs and blockchain technology represents a fascinating evolution of societal norms and values. It challenges our traditional understanding of ownership, value and community, creating a new form of ‘digital tribalism’ where belonging is tied to shared digital assets. Furthermore, the boredom expressed by the crypto wealthy and their subsequent retreat into a virtual ‘swamp club’ can be seen as a form of digital ‘potlatch’, a ceremonial feast of the Kwakiutl, where status is asserted not through wealth accumulation, but through its ostentatious disposal. As blockchain technology continues infiltrating all aspects of life, anthropology grapples to understand its impact. The cultural shift it brings is as significant as it is complex, and its full implications are yet to be unravelled.     

Books Received

In this article, I discuss the role of the three Scandinavian central banks in the establishment of the Bank for International Settlements (BIS) in 1930, and in the international lender of last resort operation towards Austria in 1931. I argue that small central banks were reluctant supporters in the establishment of the BIS and free riders in the Austrian crisis, even though there were marked differences in their attitude to international cooperation. These results run counter to the views of those International Political Economy (IPE) theorists who argue that small states should be in favour of international cooperation. On the other hand, the evidence seems to confirm Kindleberger's hypothesis that small countries were free riding during the international financial crisis of 1931, and that therefore there is a need for some coordinating mechanism, or a hegemon, in such crises.     

Quelling inflation: The role of the public

Members of the Monetary Policy Committee (MPC) of the Bank of England seek to subdue inflation using ‘monetary policy’ to regulate the availability of money and credit to the financial system. The central bank ‘policy rate’ is the blunt instrument conventionally employed to affect the pacing of economic activity, stimulating or retarding growth. Credibly explaining that the rise in interest rates – the ‘tightening’ of monetary policy – underway at the moment will continue suppressing demand for goods and services until an inflation target of around 2 per cent is achieved is the emphatic message the bank seeks to convey. Such intentionally destructive and potentially brutal interventions are the critical aim of current bank policy. This article demonstrates how the design of the contemporary monetary regime, which presents itself unequivocally as the outcome of macroeconomic developments, can be recast in anthropological terms, thus revealing the role of the public in the unfolding monetary drama.     

Blurring the Borders. How the Central Banks of the European Neutrals During the First World War Became Part of the State Machinery: Examining the Case of Norway

Abstract

This article analyses the relationship between the central banks and governments in the neutral countries during the First World War, with focus on the Norwegian development. It examines how independence was challenged, and the framework is a concept of central bank independence, which regards non-lending to the state as vital to the functioning of the central banks. This is a novel approach to the development during the war as the perspective has barely been discussed in the literature in Norway, and also seems to be disregarded in the standard international literature on central bank development. From this perspective the article argues that the Norwegian central bank’s pre-war independence was substantial compared to other central banks. Moreover, the distinct borders between central bank and government also safeguarded Norges Bank’s autonomy longer than in comparable countries after the outbreak of war. However, by the end of the war, Norges Bank had become one of the neutral central banks most interwoven with the state. Based on the historical development in different countries, the article questions the notion of the standard literature that lending to the state in a crisis was a central bank duty.     

The Regulatory State and Turkish Banking Reforms in the Age of Post‐Washington Consensus

The new era of the Post‐Washington Consensus (PWC), promoted under the auspices of International Financial Institutions such as the International Monetary Fund and the World Bank, centres on the need to develop sound financial regulation and strong regulatory institutions, especially in the realm of banking and finance in post‐financial crisis developing countries. This article uses an examination of the Turkish banking sector experience with the PWC in the aftermath of the 2001 financial crisis to show its considerable strengths and weaknesses. The authors argue that the emergent regulatory state in the bank‐based financial system has a narrow focus on strengthening prudential regulation, whilst ignoring the increased ‘financialization’ of the Turkish economy. They identify the positive features of the new era of the PWC in terms of prudential regulation, which has become much more robust in its ability to withstand external shocks. At the same time, however, the article highlights some of the limitations of the new era which resemble the limitations of the PWC. These include the distributional impact of the regulatory reforms within the banking sector, and notably the emergence of foreign banks as the major beneficiaries of this process; weaknesses in promoting productive bank intermediation that finance the real economy and economic growth, leading to poverty reduction via growth of employment whilst stimulating financialization within the economy; and finally, the exclusive focus on prudential regulation, whilst ignoring regulatory costs, consumer protection and competition regulation.     

New rent seeking strategies in housing in Spain after the bubble burst

This paper analyses the new rent seeking strategies in housing implemented during Spain’s financial crisis. The Spanish Model presents a paradigmatic case of the need for capital to reinvent itself through the articulation of new mechanisms for the production and appropriation of urban rent, as the crisis revealed the limits of strategies that were implemented during the bubble period. Amongst these new strategies, the paper analyses the rescue of financial entities, the creation of a ‘bad bank’ and the establishment of Spanish REITs. These mechanisms are leading to financialisation of rental housing and the emergence of vulture funds as new transnational owners of housing.     

Asserting Europe's technological sovereignty amid American platform finance: Countering financial sector dependence on Big Tech?

Spearheaded by major technology companies (Big Tech), digital platforms have rapidly become key infrastructures for accumulation under global financialized capitalism, with consumer convenience and underlying practices of data collection, control and analysis giving rise to platform finance. While financial institutions are partnering with financial technology (FinTech) start-ups to digitally enclose customers, American and Chinese Big Techs increasingly mobilize their platforms to offer payment services, next to expanding their platformed services to financial incumbents. Observing the growing dependence of finance on American Big Tech platforms, this paper investigates how the shift toward platform finance in the European Union (EU) unfolds as a state-mediated and power-laden process between mostly ‘domestic’ (EU) financial incumbents and ‘foreign’ (non-EU) Big Tech firms. The starting point of the analysis is the European Strategy for Data launched by the European Commission in 2020. Through document analysis, we reconstruct the circulation of code words within ‘the Brussels Bubble’ in anticipation of- and in direct response to the proposal. We find that, despite its implication in the global financial crisis, incumbent EU finance presents itself as a fix for non-EU platform domination by Big Tech. The ‘technological sovereignty’ of the EU is marshalled by incumbent finance to defend market share as would-be pan-European digital financial champions. The Big Tech ‘threat’ is thereby transformed into an argument for strategic deregulation and forced data sharing by Big Tech for the sake of maintaining a ‘level playing field’. The outcome of these processes of strategic coupling is an alignment between the interests of EU data protection and the commercial interests of platformizing European banks.     

Assessing community participation in local economic development — lessons for the new urban policy

Urban policy in Britain has long been characterised by circumscribed and fluctuating institutional structures of community involvement. From the Community Development Programmes of the early 1970s to the assertive neo-liberalism of the 1980s and back to the partnership based politics of the 1990s, community involvement in the construction and delivery of urban policy has been a critical theme. The new administration, with its emphasis on the ‘stakeholder’ society seems set to continue the trends of the 1990s by promoting the concept of partnership as something of a panacea for the difficulties and exclusionary politics that have dogged urban policy programmes. Consequently, a vital area of study into the next century concerns the form that local democratic structures will take and the relative levels and distribution of risk and reward that regeneration schemes create for different sections of local communities.Drawing on material from Cardiff, this paper examines the construction of local political relations in the new urban governance and addresses the issue of community involvement in the politics of local economic regeneration. In particular, it focuses on a small business association which emerged in the wake of the major regeneration programmes being undertaken by the Cardiff Bay Development Corporation (CBDC), a powerful quango established by central government in the late 1980s. The study demonstrates how the association, which consisted of local businesses, tried to influence the local regeneration programmes and how its ‘pro-growth’ stance was actively used by the CBDC to legitimate its own policies in the face of wider criticisms from local residential groups. The paper looks at the difficulties of constructing local community participation and concludes that voluntarist, top-down partnership structures in existing policy may only serve to legitimate and implement policy decisions taken by powerful non locally-accountable regeneration agencies.     

Development of Local Financial Systems in Mainland China

Two Beijing-based economic geographers present a comprehensive study of local financial systems in China. The paper analyzes the most recently available (2006) regional data on exogenous (state-owned, foreign-owned, and joint shareholder-owned) and endogenous (city commercial banks and rural credit cooperatives) banks, highlighting the differences between the country's coastal and the lagging rural provinces located in China's central and western macroregions. A key component of the analysis is the geographic distribution of bank branches and assets. Special attention is devoted to Shanghai, the country's traditional financial center, which has attracted the bulk of foreign-owned banks and financial service providers seeking entry into the vast Chinese market. Journal of Economic Literature, Classification Numbers: G21, G28, O18, P34. 9 figures, 3 tables, 54 references.     

Foreign banks' attraction to the financial centre Frankfurt--an inverted 'U'-shaped relationship

This article traces the location of foreign banks in Germanyfrom 1949 to 2006. As suggested by New Economic Geography models,we find an inverted ‘U’-shaped concentration offoreign banks in Germany. Only after a competition between severalcities, Frankfurt has emerged as the pre-eminent financial centre,triggered by the ‘historical event’ of setting upthe German central bank in Frankfurt. After a strong increase,Frankfurt's share in the location of foreign banks in Germanydecreases slowly but significantly since the mid-1980s. We concludethat there will be a lesser role in Europe for second-tier financialcentres in the future.     

The Neoliberal Seduction: Governing‐at‐a‐Distance,Community Development and the Battle over Financial Services Provision in Australia

This paper is concerned with understanding the reasons for the apparent success of neoliberalism: why the model of the ‘entrepreneurial, self‐reliant community’ has been adopted so widely and readily across Australia. It does this through an analysis of two events in the restructuring of financial services provision in regional Australia during the 1990s and 2000s: the John Laws/Australian Bankers’ Association ‘cash for comment’ affair, and the rise of ‘alternative’ financial service providers in the wake of the major trading banks’ financial service withdrawal programmes of the 1990s. This analysis is conducted using the conceptual toolkit of the governmentality literature. In this context, the paper explores the notion of translation — how authorities, agencies, etc., exert control over distant entities, whether these entities be branch staff or a far‐flung consumer market. In examining the often fragile character of ‘governing‐at‐a‐distance’ in modern forms of rule, it is argued that some recent advances in the ‘geography of power’ have much to offer in highlighting both the important roles played by space and scale in the execution of power in its various guises and the ways in which resistance to the more regressive features of neoliberal philosophy and policy may best focus.     

四联总处对战时银行机构的法律监管

抗日战争时期国民政府的最高金融机构——“四联总处”通过一系列立法活动加紧对银行机构设置、业务范围及业务检查等工作实施监管。监管目的在于维持战时金融经济运行的稳定,保障战时国家财政经济的金融需求,有意强化中央银行职能,以建立国民政府的金融垄断体制,对战时中国金融经济产生了积极的影响。但是,受国民政府实行的多元化银行监理体制的影响,机构设置重叠,事权未能统一,四联总处对银行的监管力度与监管实效明显不足,致使战时通货膨胀日益加剧。     

Currency Issues and Financial Crises: The Excessive Issuance of Banknotes and Price Fluctuations during the “New Policies” Period in the Late Qing

In the New Policies period of the late Qing, the central government’s power had declined due to an expansion of power at the local-government level. After gaining the right to independently fundraise during the Self-Strengthening Movement, local governments also obtained the privilege of issuing currency. Following a downward trend in China’s fiscal power, the issuance of banknotes by local government had become a noticeable problem. The influence of foreign banks in China, meanwhile, was continuing to expand, the increasing number of countries involved as well as the growing number of banks being just two examples. Because the central government lacked strong supervision, the rate of issuance of banknotes by foreign banks thus gradually increased, leading to growing prices. In addition, this dispersion of financial power further boosted inflation. Since the Qing government focused on reforming its approaches to finance and strengthening its central role during the New Policies, reorganizing its banknote policy was its primary agenda. However, to a large extent, the policy was guided by the idea that monetary policy should be subordinate to financial needs. Thus, the very limited effect of the Qing government’s banknote-reorganization policy also marked the regime’s failure to bring about the modernization of China.     

Bank Liquidity Creation in Russia

Two EU-based senior economists analyze the contribution of bank liquidity creation to the Russian economy, as well as changes in creation of liquidity occurring during the global financial crisis. Applying the methodology of Berger and Bouwman's (2009) study of U.S. banking to a rich panel dataset for Russian banks for the period 1999-2009, the authors compute three alternative measures of bank liquidity creation. They find evidence of increased creation of liquidity in real terms over the period and also determine that state-controlled (versus private) banks and Russia's largest banks (versus intermediate-size and small banks) contributed most to liquidity creation (lower in Russia than in the U.S.). Their findings suggest that consolidation of the Russian banking sector may prove more instrumental in increasing liquidity creation than privatization per se.     

Political economy of central banks

Current developments in the field of comparative political economy have emphasised the role and influence of corporatist institutions in the determination of levels of economic and social performance. Without denying the importance of corporatism, the paper argues for the need to acknowledge and examine the impact of other institutions, such as central banks, on economic performance. Given the increasing role of monetary policy in fashioning economic development, central banks have assumed a key economic and political role in policy formation. Against this background, the paper explores the theoretical and empirical implications of central bank independence, and suggests that a greater emphasis should be placed on the nature and type of central bank independence and on the institutional linkages between central banks and other state institutions.     

The Impossible Trinity: Inflation Targeting,Exchange Rate Management and Open Capital Accounts in Emerging Economies

This article contributes to the debate on macroeconomic management and capital account regulations in developing and emerging countries (DECs). It argues that the recommendation by neoclassical economists and international financial institutions (IFIs) to combine an inflation‐targeting regime with exchange rate management, whilst maintaining open capital accounts, is not only impossible but also potentially counterproductive. The article draws on extensive semi‐structured interviews with currency traders in Brazil and London to show that this is due to the particular way such a regime shapes central bank interventions in the money and foreign exchange markets and the destabilizing way these interventions interact with financial market expectations. The interview results also demonstrate that the guidelines issued by IFIs actually undermine, rather than aid, DEC central banks’ initial attempts to manage excessive exchange rate movements. These results support the long‐standing argument by heterodox economists and critical international political economists that DECs need to make the exchange rate an explicit instrument and goal of their macroeconomic policy and complement it with comprehensive capital account regulations to reduce the destabilizing impact of international capital flows. The interview results also give some concrete suggestions on how to achieve this.     

Psychoanalysis,Fantasy, Postcoloniality: Turkish Nationalism and Historiography in Post-Ottoman Turkey

In this article, I investigate the surge of scholarly interest in Ottoman minorities since 1980s - a surge that acts in defense of a national culture. What distinguishes the nationalist-cum-Ottomanist historiography of the Turkish historians under study here is the heavy emphasis on notions of tolerance and multiculturalism with direct reference to the imperial era of 15th and 17th centuries. This emerging discourse has been striving to rebut the Orientalist stigmas attributed to Turkish-Ottoman culture and civilization—such as barbaric, despotic and authoritarian—and construct its own tolerant and multicultural historical imagery. Drawing upon the urgent lessons of postcolonial experience, theory and history, I analyze the pitfalls of uncritically clinging to such an imaginary. The emergence of this new Turkish-Ottoman imaginary and its discourse of a Turkish nativism and Occidentalism that emphasizes minority rights, tolerance and the harmonious coexistence of a plurality remains an under-explored territory for postcolonial criticism. The analysis of nostalgic Ottoman literature can illuminate how the ‘Occident/Western’ and ‘Oriental/Derivative’ (i.e. the Ottoman and Turkish) formations of the national imaginary are constructed, remembered and contested in the contemporary global order.     

White migrant masculinities in Thailand and the paradoxes of Western privilege

This study examines the counter-paradigmatic migration of Westerners into Thailand, focusing on men in transnational intimate relationships in the northeastern region. We explore how the particular spaces in which they settled affected these migrants' capacities to perform what they saw as hegemonic masculinities over time. We find that they initially experienced an increase in status that they were able to convert into assets in romantic relationships, permitting them to position themselves as ‘providers’ and ‘real white men,’ drawing on masculine ideals from their home countries as well as a diffuse neocolonial imaginary. In the long run, however, these identity constructions were subject to internal contradictions and attrition. They were also place-bound, creating both financial and social obstacles to a return home, particularly for those without ties to transnational capital. The ways these patterns differ from those in existing scholarship underline how both the particular spaces of migrant settlement and temporal dimensions are critical for the analysis of migrant masculinities.     

The rise of Islamic finance: post‐colonial market‐building in central Asia and Russia

Islamic finance signifies more than a projection of religious affiliation. The importance of Islamic finance is increasing in central Asia, both as a source of capital and as a form of post‐colonial market‐building. In central Asia, it is an important facet of the new phenomena of ‘nation‐branding’ and a means of reinvigorating the economy. In identity politics, Islamic finance projects an attitude of religious tolerance allowing states in the region to reposition their geopolitical identity relative to the Islamic community. This creates a ‘performance’ of Islamic finance that facilitates the creation of legitimacy for the state. Adopting Islamic finance projects images of the state's religious tolerance and diversity without changing the underlying structures; it suggests an ‘Islamicness’ that is useful to the development and post‐colonial goals of the state. As such, it creates opportunities for geopolitical alliances with Muslim countries. Economically, it appeals to rising financial‐industrial elites seeking new investment‐opportunities, which reduces pressure on the state to democratize. Meanwhile, in Russia, Islamic finance is an alternative source of capital for the sanctions‐hit state and a useful identity marker with which to connect to the increasingly wary Caucuses and Commonwealth of Independent States countries, lending it a wider significance across Eurasia.     

Restraining regulatory capture? Anglo‐America,crisis politics and trajectories of change in global financial governance

A growing number of respected commentators now argue that regulatory capture of public agencies and public policy by leading banks was one of the main causal factors behind the financial crisis of 2007–2009, resulting in a permissive regulatory environment. This regulatory environment placed a faith in banks own internal risk models, contributed to pro‐cyclical behaviour and turned a blind eye to excessive risk taking. The article argues that a form of ‘multi‐level regulatory capture’ characterized the global financial architecture prior to the crisis. Simultaneously, regulatory capture fed off, but also nourished the financial boom, in a fashion that mirrored the life cycle of the boom itself. Minimizing future financial booms and crises will require continuous, conscious and explicit efforts to restrain financial regulatory capture now and into the future. The article assesses the extent to which this has been achieved in current global financial governance reform efforts and highlights some of the persistent difficulties that will continue to hamper efforts to restrain regulatory capture. The evidence concerning the extent to which regulatory capture is being effectively restrained is somewhat mixed, and where it is happening it is largely unintentional and accidental. Recent reforms have overlooked the political causes of the crisis and have failed to focus explicitly or systematically on regulatory capture.