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Trust no more? The impact of the crisis on citizens’ trust in central banks

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  • Wälti, Sébastien

Abstract

Citizens’ trust in economic institutions has generally declined since the onset of the crisis. In particular, Eurobarometer surveys show that trust in the European Central Bank (ECB) has fallen significantly during the crisis. This paper studies the determinants of public trust in the ECB over the lifetime of the euro. Net trust in the ECB has decreased significantly in those countries which have experienced increasing sovereign bond yields and financial market turbulence. The finding that country-specific variables affect citizens’ trust in the ECB may seem counterintuitive. However, it is consistent with strong evidence in the political science literature showing that domestic considerations play a significant role when citizens get an opportunity to express their opinion on EU matters.

Suggested Citation

  • Wälti, Sébastien, 2012. "Trust no more? The impact of the crisis on citizens’ trust in central banks," Journal of International Money and Finance, Elsevier, vol. 31(3), pages 593-605.
    • Handle: RePEc:eee:jimfin:v:31:y:2012:i:3:p:593-605
    DOI: 10.1016/j.jimonfin.2011.11.012
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    1. Karl Kaltenthaler & Christopher J. Anderson & William J. Miller, 2010. "Accountability and Independent Central Banks: Europeans and Distrust of the European Central Bank," Journal of Common Market Studies, Wiley Blackwell, vol. 48, pages 1261-1281, November.
    2. Karl Kaltenthaler & Christopher J. Anderson & William J. Miller, 2010. "Accountability and Independent Central Banks: Europeans and Distrust of the European Central Bank," Journal of Common Market Studies, Wiley Blackwell, vol. 48(5), pages 1261-1281, November.
    3. Fischer, Justina AV & Hahn, Volker, 2008. "Determinants of Trust in the European Central Bank," SSE/EFI Working Paper Series in Economics and Finance 695, Stockholm School of Economics.
    4. Paul Taggart, 2006. "Keynote Article: Questions of Europe - The Domestic Politics of the 2005 French and Dutch Referendums and their Challenge for the Study of European Integration," Journal of Common Market Studies, Wiley Blackwell, vol. 44, pages 7-25, September.
    5. Felix Roth, 2022. "The Effect of the Financial Crisis on Systemic Trust," Contributions to Economics, in: Public Support for the Euro, chapter 0, pages 219-229, Springer.
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    Cited by:

    1. Roth, Felix & Jonung, Lars & Nowak-Lehmann D., Felicitas, 2012. "Public Support for the Single European Currency, the Euro, 1990 to 2011. Does the Financial Crisis Matter?," Working Papers 2012:20, Lund University, Department of Economics.

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    More about this item

    Keywords

    Central bank; Trust; Crisis; Sovereign bond yields; Banking crisis;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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