Aditi Sahasrabuddhe, "Bankers' Trust: How Social Relations Avert Global Financial Collapse" (Cornell UP, 2025)

Jul 14, 2025

Aditi Sahasrabuddhe is an Assistant Professor at Brown University, specializing in international finance and financial crises. In the discussion, she emphasizes the pivotal role of trust and personal relationships among central bankers in averting financial disasters. Highlighting historical crises, she reveals how interpersonal ties influenced decision-making when traditional economic models faltered. The conversation also challenges the apolitical view of central banking, showcasing how these unseen dynamics shape global financial stability.

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INSIGHT

Trust Built for Radical Uncertainty

Crises create radical uncertainty making usual economic models unreliable.
Interpersonal trust guides quick, high-stakes decisions when data is insufficient.

ANECDOTE

1920s Banker Prestige Affected Loans

In the 1920s, personal prestige of central bankers shaped financial support decisions.
Germany’s fortunes improved with Schacht, who had a positive relationship with the Bank of England.

ANECDOTE

Strong’s Death Changed Crisis Cooperation

Benjamin Strong’s death before the Great Depression disrupted key central banker relationships.
His successor lacked Strong’s trust and internationalist outlook, weakening crisis cooperation.

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Central bank cooperation during global financial crises has been anything but consistent. While some crises are arrested with extensive cooperation, others are left to spiral. Going beyond explanations based on state power, interests, or resources, in Bankers' Trust: How Social Relations Avert Global Financial Collapse (Cornell University Press, 2025) Dr. Aditi Sahasrabuddhe argues that central bank cooperation—or the lack thereof—often boils down to ties of trust, familiarity, and goodwill between bank leaders. These personal relations influence the likelihood of access to ad hoc, bilateral arrangements with more favorable terms.

Drawing on archival evidence and elite interviews, Sahasrabuddhe uncovers just how critical interpersonal trust between central bankers has been in managing global financial crises. She tracks the emergence of such relationships in the interwar 1920s, how they helped prop up the Bretton Woods system in the 1960s, and how they prevented the 2008 global financial crisis from turning into another Great Depression. When traditional signals of credibility fell short during these periods of crisis and uncertainty, established ties of trust between central bank leaders mediated risk calculations, alleviated concerns, and helped innovate less costly solutions.

Dr. Sahasrabuddhe challenges the idea that central banking is purely apolitical and technocratic. She pinpoints the unique transnational power central bank leaders hold as unelected figures who nonetheless play key roles in managing states' economies. By calling attention to the influence personal relationships can have on whether countries sink or swim during crises, Bankers' Trust asks us to reconsider the transparency and democratic accountability of global financial governance today.

This interview was conducted by Dr. Miranda Melcher whose book focuses on post-conflict military integration, understanding treaty negotiation and implementation in civil war contexts, with qualitative analysis of the Angolan and Mozambican civil wars. You can find Miranda’s interviews on New Books with Miranda Melcher, wherever you get your podcasts.

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