Central Bank Independence and European Central Banking Institution-Building

1996 ◽  
Vol 14 (1) ◽  
pp. 57-76
Author(s):  
Miriam L. Campanella
Keyword(s):  
Central Bank ◽  
Central Banking ◽  
Central Bank Independence ◽  
Institution Building ◽  
European Central ◽  
Banking Institution

Abstract L’indipendenza della banca centrale dal governo viene considerata da molti studiosi come un requisito per il mantenimento della stabilità dei prezzi e per la lotta all’inflazione. L’articolo introduce la recente letteratura sull’indipendenza della banca centrale, mostrandone anche un apporto esplicativo nel caso del processo di costruzione della banca centrale europea.Benché l’indipendenza della banca centrale europea sia prevista da un articolo del Trattato di Maastricht, ci sono alcune critiche contro questa impostazione, sia perché si sostiene che l’indipendenza non sarebbe sufficiente per aumentare la credibilità, sia perché si ritiene che mantenere un basso livello di inflazione non sia di beneficio alia crescita economica.In conclusione, l’A. afferma, in accordo con gli studi sull’indipendenza della banca centrale, che in un mondo caratterizzato dalla mobilità dei capitali e dalla globalizzazione, la creazione di un ambiente finanziario stabile debba essere ritenuto uno dei più importanti fattori per la credibilità delle banche centrali.

scholarly journals Central Bank Independence, Transparency and Accountability Indexes: a Survey

2014 ◽  
Vol 7 (1) ◽  
pp. 35-54 ◽  
Author(s):  
Florin Cornel Dumiter
Keyword(s):  
Central Bank ◽  
Central Banks ◽  
Central Banking ◽  
Central Bank Independence ◽  
Advantages And Disadvantages ◽  
Aggregate Index ◽  
Central Bank Transparency ◽  
Considerable Impact ◽  
High Degree ◽  
Transparency And Accountability

Abstract Recently, the remarkable trend upon central bank independence and the efficient monetary policy were seriously highlighted in the monetary economics field. Starting from 1990s’ central bank independence was at the core of policy making and central banking problems, because of the widespread economical, political, personal and budgetary autonomy of the central bank. Nowadays, we can observe an increasing trend upon central bank transparency, for evaluating more accurate the central bank’s performances by the wide public, mass-media and financial markets. Consequently, a central bank must encompass a high degree of accountability and responsibility, because of the final liability in case of failure. In this paper we present, analyze and assess the construction of the most important indices regarding central bank independence, transparency and accountability in a chronological manner, presenting also the advantages and disadvantages of these indices related to actual practices of central banks. Moreover, we analyze the analytical results of the empirical testing of these indices with a considerable impact upon the developed and developing country group. In regard with the empirical results of different authors, we suggest the importance and the necessity for constructing an aggregate index for measuring central bank independence, transparency and accountability, based on de jure stipulations and the actual practices of the central banks.

Central Bank Independence

2021 ◽  
pp. 39-67
Author(s):  
Patrick Njoroge ◽  
Désiré Kanga ◽  
Victor Murinde
Keyword(s):  
Central Bank ◽  
Financial Stability ◽  
Financial Regulation ◽  
Central Banks ◽  
Central Banking ◽  
Central Bank Independence ◽  
First Century ◽  
Fiscal Discipline ◽  
Key Issues ◽  
Personal Accountability

The chapter covers central bank independence broadly and makes use of rich literature to bring out key issues on central bank independence from the inception of central banking in 1668 to the twenty-first century. The chapter identifies four measures of central bank independence mainly focusing on legal characteristics. The findings of the study point to benefits associated with independence of central banks, including management of inflation. Also, it is found that delegating monetary policy to an independent central bank increases debt sustainability and fosters fiscal discipline. It is noted that central bank independence needs to be reconciled with the requirements of institutional and personal accountability of the governors. Further, the financial regulation role should be strengthened in the mandates of central banks as the objective of price stability does not necessarily foster financial stability.

The European Central Bank

2020 ◽  
Author(s):  
Michael Ioannidis
Keyword(s):  
Central Bank ◽  
Sovereign Debt ◽  
European Central Bank ◽  
Debt Crisis ◽  
Central Banking ◽  
Defining Moment ◽  
European Central ◽  
Economic Constitution ◽  
Rules And Principles ◽  
History Of

The European Central Bank (ECB) is the only central bank governed by supranational constitutional law. As such, it is not only the most important institution of the Economic and Monetary Union (EMU), but it also marks a new stage in the history of central banking in general. Historically, the tasks and functions of the ECB have reflected the different stages of development of the EMU. The basic principles governing its function were set out in Maastricht, reflecting the interests and ideas about Europe’s economic constitution prevailing at that time. The sovereign debt crisis that hit Europe in 2010 was the second defining moment for the ECB after Maastricht. It posited the ECB–like the rest of the EMU–to challenges that some of the drafters of the Maastricht Treaty had not fully anticipated. These new challenges led to the adoption of novel instruments and the further clarification of fundamental rules and principles. Most important of these developments was the entrustment of the ECB with a new task, banking supervision, and the adoption of unconventional measures, which proved necessary to fulfil its monetary-policy mandate. Ultimately, not only did the ECB withstand the crisis but it emerged as a protagonist in securing the unity and integrity of the EMU.

scholarly journals On the impossibility of central bank independence: four decades of time- (and intellectual) inconsistency

2018 ◽  
Vol 43 (1) ◽  
pp. 61-84 ◽  
Author(s):  
Christopher A Hartwell
Keyword(s):  
Central Bank ◽  
Political Institutions ◽  
Institutional Analysis ◽  
Financial System ◽  
Central Banks ◽  
Central Banking ◽  
Central Bank Independence ◽  
Time Inconsistency ◽  
Fortieth Anniversary

Abstract The intellectual justification for modern central banking, time-inconsistency, celebrated its fortieth anniversary in 2017 alongside the Cambridge Journal of Economics. However, the key progeny of the time-inconsistency literature, central bank independence, has fundamental flaws that have been thus far neglected in mainstream research. In the first instance, the argument for independence relies on a utilitarian rather than institutional analysis, one that neglects the genesis of central banks and their relation to other institutions within a country. Second, central bank independence neglects the complex interdependencies of the global monetary and financial system. Applying an institutional lens to the concept of central bank independence, I conclude that ‘independence’ fails under the reality of globalization as much as it does in a domestic context. With central banks reliant on all manner of political institutions, they are never really independent operationally or in terms of policy.

Central banking and financial political power: An investigation into the European Central Bank

2018 ◽  
Vol 23 (3) ◽  
pp. 221-244 ◽  
Author(s):  
Manolis Kalaitzake
Keyword(s):  
Central Bank ◽  
European Central Bank ◽  
Political Power ◽  
Financial Sector ◽  
Analytical Framework ◽  
Central Banks ◽  
Central Banking ◽  
Power Dynamics ◽  
European Central ◽  
Revolving Doors

In the aftermath of the 2008 financial crisis, there has been a major scholarly revival of the topic of financial political power and a refocus on questions concerning democracy, elites, and inequality. Nevertheless, there remains a dearth in the literature regarding the precise nature of the political relationship between the financial sector and central banks. This is problematic given the sharp rise in institutional prominence enjoyed by central bank officials in the post crisis era and their fundamental importance in the governance of financial markets. As a corrective, this paper develops a provisional analytical framework through which the power dynamics between the financial sector and central banks can be fruitfully explored, specifically with reference to the European Central Bank. It does so by identifying four mechanisms through which financial actors potentially influence the policy choices of the European Central Bank – revolving doors, closed policy circles, capital flight/disinvestment, Too Big to Fail – and illustrates their operation empirically in the context of the bank’s organizational functioning and post crisis interventions. The paper illustrates how financial actors enjoy systematic advantages in the domain of central bank policymaking and provides significant evidence that the European Central Bank has been a key ally of the financial sector throughout the Eurozone crisis. The paper calls for a more extensive examination by scholars of the financial sector-central bank relationship as a means to clarify the precise scope of, and limitations to, contemporary financial political power.

scholarly journals Financial crisis and central bank independence and governance (CBIG) in the Asia Pacific.

2011 ◽  
Vol 8 (2) ◽  
pp. 313-335 ◽  
Author(s):  
Amirul Ahsan
Keyword(s):  
Economic Growth ◽  
Financial Crisis ◽  
Central Bank ◽  
Central Banks ◽  
Central Banking ◽  
Central Bank Independence ◽  
Asia Pacific ◽  
Positive Relation ◽  
Crisis Period ◽  
The Impact

This paper examines the impact of financial crisis on central bank independence and governance in 36 Asia Pacific countries. It constructs a unique CBIG index for fifteen years (1991-2005); which has an overall index and six sub-indices covering all the necessary aspects of central banking operations. These indices are ranked first to measure the relative positions of the central banks and then statistically tested their relationship with inflation, economic growth and financial crisis of 1997. It applies a panel data pooled regression model and finds a robust negative relation of CBIG with inflation; moderate positive relation with economic growth; and CBIG in post crisis period is significantly different from the pre-crisis period.

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