What norms and values do international banks uphold during financial crises?
The 22nd of march 2023, political scientist Lukas Spielberger will defend his dissertation ‘Lessons from Europe for the study of international bank cooperation’. He wrote his thesis about the cooperation of central banks during international financial crises: ‘central banks pay more attention to shared values and identities than is commonly thought.’
Congratulations on finishing your thesis! What did you research, and what have you found?
‘In my PhD research, I was interested in understanding why central banks cooperate with each other during international financial crises. Both during the Global Financial Crisis in 2008 and the more recent COVID-19 crisis in 2020, central banks had to act together to prevent a financial meltdown. The most common explanation is that central banks support each other ultimately because, by cooperating, they protect their own monetary policy interests. But I argue that these interests are often unclear and that central banks may also cooperate simply because they think it is the right thing to do.
‘Central banks may also cooperate simply because they think it is the right thing to do.’
I looked at various ways in which central banks in Europe cooperated around 2008. To reconstruct the events I interviewed policymakers and reviewed archival sources. Overall I found that central banks lent each other money out of solidarity, but also that some of these loans between central banks came with strict conditions attached. Besides, central banks created three new multilateral institutions, where they developed new rules and task divisions to ensure regional financial stability. I find that these institutions served above all to facilitate consensus-oriented deliberations.
My overall takeaway from this study is, then, that monetary technocrats cooperate not just based on the situation in financial markets, but also based on how they see themselves in the international community. This conclusion highlights how central banks pay more attention to shared values and identities than is commonly thought. But it also suggests that it may become more difficult for them to justify their cooperation in the national interest because central banks draw their legitimacy from their technocratic image, not appeals to values.’
What was your drive to engage in this research project?
My initial motivation was to find an answer to something that I found confusing. When I was writing my MA thesis in 2018, I came across the fact that the European Central Bank (ECB) had provided far less financial assistance to other central banks during the Global Financial Crisis in 2008/9 than the US Federal Reserve had at the same time. The original objective in my research proposal was to understand why the ECB would not do more to support the financial stability in EU member states outside the Euro Area. But truth be told, at the time, this was a rather arcane issue to study – who was interested in central bank cooperation in Eastern Europe ten years ago? But one year into my PhD my topic suddenly became a lot more relevant: in 2020 the ECB again had to confront such calls for assistance and proved more forthcoming.
In what way(s) will your dissertation impact future research?
I think that my approach of thinking of central bank cooperation, especially the provision of credit lines, as something that reflects norms, rather than financial interests is something quite innovative. It is just very convenient to find some economic rationale (especially if most central bank watchers are economists by training). But central banks form a very close international community where there are clear understandings of what one ought to do in certain situations. In fact the ECB’s perceived failure to rise to the occasion in 2008 irritates policymakers to this day. So going forward, I think that research should unpack how these norms for cooperation have developed. I am currently working on a proposal for a book in which I want to apply this theoretical angle beyond the cases studied in my dissertation.
What else have you learned during your PhD project?
In terms of self-management, the biggest learning experience was probably how to write productively and fast. Everybody needs to find out how they work best and I had to do so very suddenly: in 2021 I was offered a great post-doc position, but if I took it, that meant that I would have to cut my PhD short and write my entire book-length thesis in eight months. I went for it. At first, I found it quite difficult to write a chapter a month, but in the final stages, I had found out what worked best for me and I wrote my introduction and conclusion in just two weeks.
More generally, I have discovered how important routines are for me to function well. Daily rituals, exercise routines, set working times. This may seem a bit dull, but it provides a great peace of mind and helped me through social isolation during the lockdown and during the first months of the Russian invasion of Ukraine, which were very tough for my wife (who is Ukrainian) and me.
What are you going to do after the defense?
Well, I am now already six months into a post-doc at the University of Luxembourg and I am very excited about what I am currently doing: we study European institutions that can borrow money on capital markets. In fact, the day after the defense, I will already be back conducting interviews for my current project. My professional goal is to stay in academia and I hope to find a permanent position soon that will allow me to turn my thesis into a monograph.