Coordinating monetary policy and macroprudential policy: bureaucratic politics, regulatory intermediary, and bank lobbying

Abstract

We tend to overlook the linkages between how policy coordination within bureaucracy is achieved and the nontrivial implications of policy coordination for business power over the policy process. This article addresses this gap by exploring macroprudential regulatory governance in Turkey. Drawing on elite interviews and written sources, the article argues that analytically and operationally more capable and politically endorsed central bank subordinated the autonomous bank regulator, as the latter assumed a de facto regulatory intermediary role between the former and the regulatee. Within this setting, the regulatee could not rely on its structural and institutional power for mobilization of instrumental power to contest and overturn macroprudential measures. The article contributes to our understanding of the conditions of policy coordination within bureaucracy, how de jure regulator could be subordinated as a de facto regulatory intermediary, and why influential business power needs both a politically and bureaucratically enabling setting.