(By Jakob de Haan en Sylvester Eijffinger| VOX, CEPR’s Policy Portal , 27 January 2017)
It has been observed that since the start of the Global Crisis, central banks in most advanced economies have become more powerful and political, but they have not become more accountable. This column discusses why central bank independence matters, and looks at whether it has changed since the crisis.
Central bank independence (CBI) means that monetary policy is delegated to unelected officials and that the government’s influence on monetary policy is restricted. According to Willem Buiter (2016), central bank independence is under threat. In his view, this threat “comes both from the wider political and social climate – the rise of populism and of anti-establishment, anti-expert and anti- technocratic sentiment – and from developments specific to central banks. Since the start of the Global Crisis in mid-2007, central banks in most advanced economies have become more powerful and political. They have not become more accountable. Their mandates have expanded far beyond monetary policy narrowly defined.” (Buiter 2016, p. 3). In a new CEPR Policy Insight, we discuss in more detail why CBI matters and whether it has changed since the Global Crisis (de Haan and Eijffinger 2017). This column summarises our findings.
DNB Working Paper 539 – The politics of central bank independence – Jakob de Haan en Sylvester Eijffinger
CFM Survey Central bank independence in the future
New challenges for central bank independence – CentER and EBC