Regulating International Finance: The Genesis and Transformation of Central Banking Practices

This dissertation investigates the development of financial regulation since the nineteenth century through central banks’ governing practices in industrial countries. Since central banks adopted the lender-of-last-resort function in the 1870s, they have been continuously contributing to the stabilization of financial markets. However, the nature of their governing practices has transformed. This dissertation addresses the sociological and historical underpinnings of central banks’ authority. By combining theoretical insights from interactionist sociology (e.g., Pierre Bourdieu, Norbert Elias, and Etienne Wenger) and from the philosophy of modernity (e.g., Hannah Arendt, Michel Foucault, and Jürgen Habermas), it looks into the crucial role of knowledge for financial governance in general and central banks’ authority in particular. Knowledge shapes governance in two ways. It structurally creates the conditions of possibility for certain practices to develop and it cognitively represents reality. Such representations become incorporated into the background knowledge of the community of practice. The thesis highlights the importance of modern science for governance to occur. The rise of science in economics and finance has transformed legitimate representations of the financial environment and concepts of competence and credibility defining who is entitled to act. The dissertation details three practices of financial stabilization by central banks through time, each of which stem from a distinct market representation and cultural configuration of the community of practice. The practices investigated are monetary-based, capital-flow-based, and standard-based practices of governance.Ph.D