My first answer to this question was a clear “no” if faith means “belief in unquestioned authority”. Central bankers should not ask just for faith, they cannot expect such faith and they cannot take faith for granted. Instead they must work hard every day to earn the trust that the public places in them. Central bankers are not super-humans, they cannot be guaranteed to be benevolent or omniscient. They will perform best within an institution that is given a clear objective and that is held accountable by the public. Conversely, the public would be ill-advised to put “blind trust” in central bankers. Price stability, preserving the value of money is the precondition for a well-functioning market economy, for economic and social stability, a free and prosperous society. Price stability is too important for society to be left “on trust” to the vagaries of the political process or to the whims of individual central bankers. It requires to build solid and strong independent institutions which are dedicated to serve and defend the common good of price stability. It is both economically sensible as well as democratically legitimate for society to delegate such a limited and well-defined task to an independent central bank. Such an act of delegation confers an obligation on the central bank to fulfil this trust and to be held accountable. Faith may be all right, but control by an attentive public will also be needed.
On the one hand, it allows diverse experiences, arguments and points of views being brought to the table. On the other hand, there is a shared responsibility for the common decisions taken. It is not a single individual but the entire institution which is behind these decisions. To my mind both aspects are crucial for a strong and independent central bank. For these reasons accountability and transparency are both more easily and more appropriately implemented in the relationship between the public and the central bank as an institution, rather than primarily with respect to individual central bankers. In this relationship the public acts as a principal who delegates the task of monetary policy to the central bank as its agent. The act of delegation can be one-off, of a constitutional nature, or it can be periodically renewed. In both cases it is crucial that the central bank can be held accountable for its performance by the public. This can be achieved in different - more or less formal - ways. Even if no explicit contractual elements and specific sanctions are incorporated in this relationship the delegation of decision-making authority to an independent central bank establishes a kind of quasi-contractual relationship. The delegation of authority represents an act of trust on the part of the public and it represents a promise and an obligation on the part of the central bank to fulfil its mandate. So, should we - should you - have faith in central banks? The answer is yes and no.