Lars E O Svensson's picture
Affiliation: 
Stockholm School of Economics
Credentials: 
Professor of Economics

Voting history

The Future of Central Bank Independence

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Question 3: More generally, do you agree that it is desirable to maintain central bank independence? Again focus on the near future, say next 48 months.

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Answer:
Strongly agree
Confidence level:
Very confident
Comment:
It is definitely desirable to maintain central bank independence, provided that its purpose is to best achieve democratically determined objectives of monetary policy. But then central bank independence must be combined with strong accountability to achieve those objectives.

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Question 2: Do you agree that the traditional argument that less central bank independence leads to higher inflation will (still) be relevant over the next 48 months in Western economies?

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Answer:
Neither agree nor disagree
Confidence level:
Confident
Comment:
Historically, external pressure on central banks has mostly been pressure to accept higher inflation than the inflation target. More recently, there has been cases of external pressure to accept lower inflation than the target, for instance in the Eurozone and in Sweden. Therefore, it seems that pressure to deviate from the inflation target may be in either direction, not necessarily always to exceed the target. In order for central bank independence to be consistent with democracy, the purpose of central bank independence must be to best achieve democratically determined objectives of monetary policy. Importantly, central bank independence should not allow central banks to deviate from those objectives, as for instance the Riksbank did when it strongly tightened monetary policy and "leaned against the wind" during 2010-2013. Therefore, central bank independence must be accompanied by sufficient central bank accountability to achieve the democratically determined objectives of monetary policy.

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Question 1: Do you agree that central bank independence in the Eurozone and the UK will decline over the next 48 months?

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Answer:
Agree
Confidence level:
Not confident
Comment:
One has to distinguish de jure and de facto central bank independence. I do not think de jure independence will decline in the next four years in the Eurozone and the UK. However, political pressure on central bank policy may increase, and that may marginally affect central bank policy, so in that sense de facto independence may decline somewhat.

German Council of Economic Experts' view of ECB policy

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Question 2: Do you agree that the ECB's monetary policy masks structural problems of member states?

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Answer:
Disagree
Confidence level:
Confident

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Question 1: Do you agree that exceptionally loose monetary policy by the European Central Bank is no longer appropriate?

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Answer:
Strongly disagree
Confidence level:
Very confident