CENTRAL banks are gaining so many new powers that it is time to consider ending their independence from government control, International Monetary Fund (IMF) boss Christine Lagarde indicated yesterday.
This would represent a major shift in central banking, which has been given credibility by its freedom from politicians since – in the UK’s case – 1997. However, since the financial crisis, authorities like the Bank of England have been given major new powers for financial stability, on top of their previous jobs of controlling inflation. As a result, Lagarde questioned whether this situation can continue.
“We must look ahead [and] shed some light on what the new world of central banking might look like once the world returns to more normal conditions,” she told a conference in Washington DC.
“Can (or should) central banks remain fully independent despite a wider mandate?”