First, there is the theological meaning of faith as “belief in religious doctrine”, “spiritual apprehension of divine truth apart from proof” or, more generally, “belief founded on authority”. Here, Blaise Pascal springs to mind as an advocate of a strict separation between faith and reason. In his view one could not arrive at faith by means of reasoning but only “through the heart”. On this first definition my answer to the question posed by the title of my lecture is “no”. I would prefer to confine faith, in the sense of unquestioned belief, strictly to the private and religious sphere. When it comes to central banking neither the central banker’s actions nor the public’s expectations can afford to just rely on faith devoid of proof or evidence. Moreover, I do not regard it as helpful to characterise central banking as some sort of mystical art that is to instil awe and worship. On the contrary, I consider that the public would be generally ill-advised to put “blind trust” into particular individuals or institutions. This is an important lesson to take away from liberal economic and political philosophy as well as from the overwhelming merits of the democratic system of government. Ultimately, trust must be earned, it is granted temporarily, it must be checked and it must be backed up by hard evidence, not be based purely on faith or belief.
Indeed as far back as the middle ages Nicolaus Oresme has argued in favour of stable money as a principle of natural law and has denounced the debasing of currency by the state as worse than usury and equivalent to robbery and exploitation. In our times another bishop, Karl Lehmann, the current chair of the German Conference of Bishops, has stressed a moral and ethical justification of price stability. In line with recent documents of catholic social teaching he emphasises the fact that inflation tends to hit the weakest segments of the population hardest and that it has contributed to impoverishment in particular in developing countries. On the whole, however, the world of faith and the world of money eye each other with a good measure of distrust and suspicion. Men of faith have often regarded money as the symbol of greed, sin and evil rather than as an instrument for mutually beneficial exchange and a foundation of prosperity. The Christian ethical tradition has in particular expressed moral reservations against the trading or lending of money against an interest charge. This sceptical attitude towards money and interest rates, which to an economist is simply the intertemporal price of money, was well-entrenched in the Scholastic tradition and goes back to Aristotle’s view that to “make money out of money” would go against natural law. Interestingly such moral scruples on lending against interest are also found in other religions and this form of lending is banned to this day in the Islamic world.