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?”