Question

Are central banks in other nations moving toward more or less independence? Why?

Answer 1

Central bank independence is as old as central banking and has remained an important issue throughout the evolution of central banking. Empirical evidence has continued to build up in support of the view that central bank independence help to promote microeconomic stability especially price stability and that countries with independent central banks have lower and more predictable budget deficits. There has growing interest in increasing the independence and implementation of monetary policy .

A central bank is inherently a public sector institution and it is the government that final responsibility for the economis and financial policy of the country.