n Journal of Public Administration - The relationship between government and central banks : how independent are central banks in the Common Monetary Area (CMA) of southern Africa?




Central banks are unique public institutions. Generally, they are established by government, funded by government, and their governors and directors are appointed by government. Yet they have to be autonomous or independent from government! If not independent, grave risks entailing political manipulation and exploitation awaits them, harbouring threatening consequences for the economy and social structure of the country. Consequently, central bank independence (CBI) is currently internationally regarded as an essential yardstick for measuring good practice in governments. The Common Monetary Area (CMA) region in Southern Africa consists of Southern Africa, Lesotho, Namibia, and Swaziland and they have agreed to achieve, together with the other 10 countries of the South African Development Community (SADC), a monetary and economic union by 2016. This article assesses the current adequacy of the legal (de jure) independence of the four CMA central banks from their governments. The article establishes and applies political as well as economic criteria for measuring CBI in the four CMA central banks. The results are utilised to indicate the extent to which each bank satisfies the criteria for legal independence and how much they need to transform towards the accepted principles of a respected, independent central bank.


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