Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Join the forum, it's quick and easy

Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

Would you like to react to this message? Create an account in a few clicks or log in to continue.
Established in 2006 as a Community of Reality

Many Topics Including The Oldest Dinar Community. Copyright © 2006-2020


    Can central banks survive the age of populism?

    Rocky
    Rocky
    Admin Assist
    Admin Assist


    Posts : 274179
    Join date : 2012-12-21

    Can central banks survive the age of populism? Empty Can central banks survive the age of populism?

    Post by Rocky Thu 22 Nov 2018, 7:19 am

    Can central banks survive the age of populism?
    Can central banks survive the age of populism? 640

     22 November 2018 02:56 PM
    Editing: Noha Al-Nahhas
    Mubasher: Can the independence of central banks be the new victim of the current populist era? This question arises in the current period with the rapid rise of populist ideas around the world.
    An analysis by Bloomberg View showed US President Donald H. Trump's repeated attack on the Federal Reserve on the pretext of raising interest rates at an accelerating pace, threatening economic growth and stabilizing financial markets.
    In India, it is reported that the government is likely to use previously unapproved laws related to central administration to force it to change some of the most recent and controversial policies.
    The government wants India's central bank to ease lending restrictions to stimulate economic activity, job growth and the recycling of cash reserves to fund populist spending ahead of next year's election.
    There has been speculation in the past tense that the resignation of the Governor of the Central Indian if the government did not back down on these measures.
    In Europe, the populist government that seized power in Italy spent the last week of October attacking European Central and Italian Central Bank President Mario Draghi, warning that borrowing costs could escalate unless Rome kept the eurozone financial constraints.
    Luigi de Mayo, deputy speaker of the Italian parliament, accused Draghi of "poisoning the climate".
    Over the past year, three out of 19 representatives of local central banks in the ECB have been involved in domestic legal disputes, while others have faced pressure to resign.
    The independence of the central bank may seem to be a constant and universally accepted reality. Indeed, the consensus that supports this reflects one of the achievements of the era of technocratic moderation from the early 1990s onwards.
    In 1993, a landmark study by Lawrence Summers and Alberto Lysena showed that independent central banks do a better job of controlling inflation. Over the next two decades, independence and inflation targets have become a standard or at least a common aspiration around the world.
    But why do the lukewarm equations of inconsistent time periods and macroeconomic theory suggest that the independence of central banks is a good idea? The answer is that then monetary policy is determined by independent technocrats. They do not have to deal with elections or voters, so they have a longer time horizon and a simpler incentive.
    Therefore, there are no considerations or targets other than inflation that raise the concerns of the independent central bank official even if these other factors appear more important to voters or politicians at a specific moment.
    It would be impossible to make that argument for technocratic control one of the salient principles today, in a world that is witnessing a coup against irresponsible experts, and certainly the essence of the populist era is the denial of all these actions.
    Populism calls for power and authority not to be left to a group of technocrats, but must remain in the hands of the "people" or the official who proclaims himself the embodiment of popular sovereignty.
    The president, who believes that inflation can be controlled by low interest rates and that any official not controlled by the "traitor" will not allow the central bank to raise the interest rate to the extent required by economic factors.
    And the prime minister who needs the money for the popularly desired spending will need the central bank to give him his own reserve.
    The president, who believes that the fast-paced stock market is key to his re-election, will insist on keeping interest rates low.
    Recent conflicts have highlighted the fundamental dangers of populism. It is not just the bad policy practice of populists who hurt that they claim to be helping them. Central bankers also make mistakes.
    The real danger is that financial institutions that have been established diligently to reduce mistakes or learn from those who have erred are likely to diminish their role so as not to exist or change fundamentally.
    Vergimp himself acknowledged the importance of the independence of the central bank, and the Indian Minister of Finance responded to the concerns of the resignation of the Governor of the Central Bank, stressing the importance of the independence of the bank despite the denial of responsibility for the differences between the financial and monetary authorities.
    A quarter of a century after the famous study by Summers and Alicina, the relationship between central bank autonomy and inflation has become less clear in terms of data, and Summers himself has retracted his claims a little recently.
    Although there are some economic reasons for this, part of the explanation is that central banks certainly are no longer as diverse in their institutional strength as they were before.
    It would be foolish to assume that this change is permanent and that the independence of central banks will remain sacred. If the populists succeed in penetrating the last bastion of technocracy, we are all likely to experience the instability that will ensue before we realize once again why allowing politicians to intervene in monetary policy is a bad idea. .



      Current date/time is Sun 21 Jul 2024, 9:16 am