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Independent central banks as a component of the separation of powers


  • Peter Bernholz



Citizens are strongly interested not to suffer from the damages wrought by inflation. With the development of inconvertible fiat paper money and the creation of the monopoly of central banks to issue unlimited amounts of banknotes the restrictions formerly existing because of the convertibility of notes into gold or silver at a fixed parity have been removed. As a consequence a constitutional or legal limitation of the supply of money became necessary to check the inflationary bias of politicians became necessary. This could be reached by introducing the independence of central banks from political and governmental influence as a fourth pillar of the separation of powers. The paper also discusses under which conditions monetary stability and independence of central banks can develop and under which it is threatened. Copyright Springer Science+Business Media New York 2013

Suggested Citation

  • Peter Bernholz, 2013. "Independent central banks as a component of the separation of powers," Constitutional Political Economy, Springer, vol. 24(3), pages 199-214, September.
  • Handle: RePEc:kap:copoec:v:24:y:2013:i:3:p:199-214
    DOI: 10.1007/s10602-013-9142-y

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    Cited by:

    1. Carsten Hefeker, 2019. "Stable Money and Central Bank Independence: Implementing Monetary Institutions in Postwar Germany," MAGKS Papers on Economics 201924, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    2. Richard C. K. Burdekin & Leroy O. Laney, 2016. "Fiscal policymaking and the central bank institutional constraint Una Vez Más: New Latin American evidence," Public Choice, Springer, vol. 167(3), pages 277-289, June.

    More about this item


    Monetary institutions; Separation of powers; Inflation; E5; E63; K10; N1; P16;

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • 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
    • K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law)
    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism


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