Central Banks, Social Purpose and Macroprudential Regulation

Despite being a central concept in a seminal pioneering article (Ruggie, 1982), social purpose has somewhat fallen off the radar in the field of International Political Economy (IPE). This paper argues in favour of a rehabilitation of the concept of social purpose and a systematic reconsideration of its centrality for research programmes in IPE. The paper outlines the growing importance of macroprudential regulation as a new emerging policy field increasing the powers and responsibilities of central banks, and outlines why articulations of social purpose will be particularly important in this policy field. We identify a tension between the regulative function of macroprudential as a form of system maintenance and its transformative potential as a profound critique of existing financial practices. This tension raises the question of what macroprudential regulation is for and this question can only be addressed through clear articulations of social purpose. We develop an intellectual history or genealogy of macroprudential ideas, outlining the intellectual foundations and rationales for macroprudential policy, using this to demonstrate the politically contested nature of macroprudential and to provide an account of what is at stake in these contests. The paper outlines some of the complex conflicts facing central banks in developing legitimacy and maintaining public support for macroprudential regulation, as the primary agencies responsible for developing and implementing it, relating this to the all-important question of articulating social purpose. The question of who defines the social purpose of macroprudential regulation remains uncertain and unanswered.