Central bank independence: cases, measurement and future developments (original) (raw)

The independence of central banks has become a focus of debate among contemporary policymakers. The importance of this issue has been strengthened by the requirements of the Maastricht Treaty which requires the European Monetary Union states to comply with the legislation of the European Central Bank, which is widely acknowledged to be a highly independent central bank. This paper traces the roots of central bank independence in the historical development of four major central banks. The focus of this study is the evolution of the relationship between the four banks studied and their central government. The banks covered in this study are: the Bank of England, the Banque de France, the Bundesbank and the Federal Reserve. Similarities in the central banks’ development have been captured and comparisons drawn. The emerging increase in the banks’ independence appears to be a part of their evolution, whereas for other countries, one may argue that it has been an exogenously driven phenomenon.