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The Fear of Freedom: Politicians and the Independence and Accountability of Financial Sector Supervisors
Author:
Mr. Michael W Taylor
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,
Mr. Marc G Quintyn
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Ms. Silvia Ramirez
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Series:
IMF Working Papers
Volume/Issue:
Volume 2007: Issue 025
Language:
English
Publication Date:
01 Feb 2007
DOI:
https://doi.org/10.5089/9781451865899.001
ISBN:
9781451865899
ISSN:
1018-5941
Pages:
50
Keywords:
WP; RSA independence; independence rating; agency independence; monetary policy; minister of finance; Bank supervision; financial regulation; public administration accountability; accountability arrangement; executive branch; Legal support in revenue administration; Financial sector; Central bank autonomy; Africa
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Compared with the case of central bank independence, independence for financial sector supervisors remains more controversial. This paper analyzes changes in independence and accountability arrangements in a set of 32 countries that overhauled their legal and/or institutional frameworks for supervision in recent years. Despite improvements, there is strong evidence that the endorsement of independence remains half-hearted, which shows itself through either overcompensation on the accountability side, or resort to political control mechanisms. The latter could potentially undermine the agency's credibility. The results indicate that policymakers still need to be persuaded of the long-term benefits of independence for financial sector soundness, and of the potential for a virtuous interaction between independence and accountability, if the arrangements are well-designed.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund