Original title: The independence of Central Banks, a reductio ad impossibile
Authors: Ion Pohoata, Delia-Elena Diaconasu, Ioana Negru
This article challenges the notion of independence of Central Banks, a concept that has been widely accepted and revered since its inception. It argues that the idea that inflation is solely a result of monetary factors does not provide sufficient justification for granting independence to Central Banks. The article goes on to debunk several arguments commonly used to support Central Bank independence, such as the conservative central banker archetype, the imaginary Principal-Agent contract, and the alleged financial autonomy. It also highlights the lack of clear guidelines and well-defined outlines in the operational toolbox and rules of independence. By presenting these arguments, the article concludes that the concept of Central Bank independence is not as logical or convincing as it is often made out to be.
Original article: https://arxiv.org/abs/2311.10716