oa South African Journal of Economic and Management Sciences - On the meaning of central bank independence
|Article Title||On the meaning of central bank independence|
|© Publisher:||University of Pretoria|
|Journal||South African Journal of Economic and Management Sciences|
|Publication Date||Jun 1998|
|Pages||254 - 267|
|Keyword(s)||Central bank independence, Central banks, Democratic societies, Economics, Elected governments, Finance, Financial institutions, Formal independence, Informal independence, Management, Personalities, Policy making, Professionalism, Public administration and Public support|
ISI Social Science
This article aims to clarify the meaning of the multifaceted term central bank independence. Such independence cannot be understood in an absolute sense, because the elected government in a democratic society remains the highest authority in respect of economic policy-making too. Nevertheless, central banks globally are currently endowed with strong relative independence. This may be separated into two broad categories, namely formal) and informal independence. Political and economic independence are identified as elements of the former, and their various subcategories are expounded below. Informal independence is then highlighted as the more important component of independence, of which personalities, professionalism and public support are crucial. However, an ideal combination of the determinants of independence is hard to find.
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