why is central bank independence important? state your own veiws
Central bank independence is the absence of daily and direct control over the current goals and actions of the central bank from the government. The independence of the bank from the government can be achieved by the government's deprivation of the right to dismiss directors of the central bank, or try to force their policies. Central bank independence is welcomed by those who believe that a stable money is a boon for the economy. The stability of the money supply can sometimes be in conflict with the objectives of the government, especially when it seeks to increase employment in the country or to protect a variety of vested interests. There is a belief that government succumbs to the temptation of ill-considered policies leading to inflation as a result of attempts to increase employment or inability to resist certain groups, who lobby government spending and tax cuts too easy. Thus, being under the direct control of politicians the central bank is forced to conduct monetary policy leading to inflation, and unable to carry out a sufficiently tight monetary policy, preventing inflation. It is assumed that an independent central bank is better at maintaining monetary stability for two reasons. First, its obligation to help preserve monetary stability can be fixed by law, and secondly, price stability is beneficial to banks, as many bank assets are denominated in money terms. In the long term, central banks, of course, can not be completely independent from political power, since the banking system is part of the country's political structure. If the central bank independence is fixed by law, the law can be changed: even in cases where the independence is guaranteed by the constitution, the constitution may also be amended.