Central bank independence: monetary policies in selected jurisdictions (III)
AbstractA sufficient and appropriate degree of central bank independence is widely acknowledged to be necessary for the goal of achieving price stability. However, despite the levels of independence claimed to be enjoyed by several central banks, recent events indicate shifts in focus of monetary policy objectives by various prominent central banks. The impact of political and government influences on central banks' monetary policies has been evidenced from the recent financial crisis – and in several jurisdictions. Many central banks have adjusted monetary policies having been influenced by political pressures which have built up as a result of the recent crises. However such lack of absolute independence (from political spheres) could prove symbiotic in the sense that, despite the need for a certain degree of independence from political interference, certain events which are capable of devastating consequences, namely, a drastic disruption of the system's financial stability, need to be responded to as quickly and promptly as possible. Is it possible for a central bank with absolute independence to operate effectively – particularly given the close links between many central banks and their Treasury in several countries? It may be inferred that central banks' crucial roles in establishing a macro prudential framework provide the key to bridging the gap between macro economic policy and the regulation of individual financial institutions. This however, on its own, is insufficient – close collaboration and effective information sharing between central banks and regulatory authorities is paramount.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 45722.
Date of creation: 02 Apr 2013
Date of revision:
central banks; stability; regulation; financial crises; macro prudential; Basel III; systemic risk; supervision; liquidity; monetary policy; inflation targeting;
Other versions of this item:
- Felix, Ayadi & Marianne, Ojo, 2013. "Central bank independence: monetary policies in selected jurisdictions (I)," MPRA Paper 45679, University Library of Munich, Germany.
- Ayadi, Felix & Ojo, Marianne, 2013. "Central bank independence: monetary policies in selected jurisdictions (II)," MPRA Paper 45684, University Library of Munich, Germany.
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
- K2 - Law and Economics - - Regulation and Business Law
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-04-06 (All new papers)
- NEP-CBA-2013-04-06 (Central Banking)
- NEP-MAC-2013-04-06 (Macroeconomics)
- NEP-MON-2013-04-06 (Monetary Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Discussion Paper Series, Department of Economics, Loughborough University
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