Central Bank Independence: Retrospect and Impact on Financial Stability
Central bank independence, as discussed at the Bank of England conference, reflects on 20 years of progress and its implications for financial stability. Debelle and Fischer's research on goal dependence versus instrument independence is examined in the context of empirical data on central bank independence and inflation control. The impact of central bank independence on economic stability, monetary policy effectiveness, distributional consequences, and the ongoing debate on the role of central banks in times of crisis is explored. Tags: Central Bank Independence, Financial Stability, Monetary Policy, Inflation Control, Economic Stability
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Presentation Transcript
28 September 2017 Address at Bank of England Independence: 20 Years On Conference, London CENTRAL BANK INDEPENDENCE IN RETROSPECT Guy Debelle Deputy Governor
How Independent Should a Central Bank Be? Debelle and Fischer 1994 Goal Dependence Instrument Independence
Goal Dependence/Instrument Independence The Bundesbank and the output costs of inflation control (sacrifice ratio) Theoretical literature Rules v Discretion Rogoff s conservative central banker Walsh s performance contract/RBNZ Empirical results Increased CBI Low inflation
Has CB Independence Delivered? The NICE decade Update the empirics: Balls et al The UK 2010-2012 But what about the crisis?
Central bank independence under threat? The crisis Is CBI to blame? Monetary policy the only game in town? Distributional consequences of monetary policy Ever been thus. Why more now? Wages
Conclusion Financial Stability and Independence Accountability is key
28 September 2017 Address at Bank of England Independence: 20 Years On Conference, London CENTRAL BANK INDEPENDENCE IN RETROSPECT Guy Debelle Deputy Governor
