Central Bank Independence
This video is a lead into the more detailed analysis by Goldman Sachs featuring Sir Paul Tucker, Donald Kohn, and Jan Hatzius about central bank independence.
Sir Paul is an ex-central banker of the BoE and he wrote a book entitled Unelected Power. He expresses clear concerns about the role of central banks being used without a firm constitutional setting and balance of fiscal and monetary is not being maintained adequately due to a political reliance on the central banks to solve political problems – which he states is not viable.
Donald Kohn voices the view that politicans are short-term thinkers minded on their own re-election; and this limitation focuses them away from long-term policies which are the goal of the central banks.
Jan Hatzius said politicans influence central bank policy by affecting the bond markets which then impacts the decision making at the central banks.
They all supported the notion of central bank independence.
The recent sacking in Turkey of the central bank governor on political grounds sparked a sharp critical response from the markets.