Central Bankers in Crisis: Interpersonal Trust, Cooperation, and the Creation of the Fed Swap Network during the 2008 Global Financial Crisis

Abstract

How do policymakers respond to global crises? I argue that interpersonal trust enables policymakers to engage in ad hoc cooperation, in conditions of crisis and uncertainty. Leaders’ differentiated ties by degree—of stronger, looser, or absent—interpersonal trust influenced economies’ access to Federal Reserve swap lines over costlier unilateral and multilateral alternatives during the 2008 Global Financial Crisis. Using this framework, I re-examine the emergence of the Fed swap network. I triangulate evidence from elite interviews with central bankers in office during the crisis, and transcripts of Fed meetings. My findings highlight the role of interpersonal trust as an operating variable in shaping patterns of international cooperation and problematize the politics of technocratic governance. While necessary and successful, these crisis management policies reinforce global hierarchies and exacerbate the democratic deficit in central banking. This article thus draws attention to the contentious and undemocratic foundations of the global financial safety net.