Abstract

A central bank independent of government influence is essential for a successful monetary policy. This is the rule that one arrives at when looking at the experiences of those countries that perform the role of the central bank in maintaining price stability. There is the rare exception: France appears to be the most obvious example; in recent years, it has achieved relative price stability without its central bank being independent of the government. It is often said that “the exception proves the rule.” And the rule is that countries with an independent central bank show a better record on inflation than those without. Indeed, a fairly close correlation between inflation performance and the degree of independence of the central bank seems evident.

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