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Willem Buiter: What's left of central bank independence? (May 5, 2009)
I happen to agree with Governor King on the undesirability of a further discretionary fiscal stimulus for the UK.  But why on earth did he say this in public?  This was definitely a sliding tackle, nowhere near the ball, with both feet aimed firmly at sensitive parts of the political anatomy of the Chancellor and, even more, of the Prime Minister.  It politicises the Bank of England and makes it fair game for any government minister or member of the opposition who wants to put pressure on the bank or attack it in public.  Not smart.

President Trichet of the ECB is already so far down the road of telling governments what to do and what not to do in the fiscal and structural reform domains, that one is hardly surprised by yet another lecture on budgetary policy from the Eurotower.  Traditionally, continental European central bankers speak very little about monetary policy in public, and are often unwilling to engage in public debate or answer questions about their monetary duties, but carry on endlessly about budgetary and structural reform matters. It's always easier to speak about things you have no responsibility for, that are not part of your mandate and about which you probably don't know very much.

The opposite problem has been encountered in the US, when Ben Bernanke has been so often seen shoulder-to-shoulder with past and present Secretaries of the Treasury, that it is hard to tell (except for the beard) where one begins and the other ends.  A Chairman of the Fed ought not to publicly endorse or reject fiscal measures, budgets or plans.  It's not his mandate and not his competence.  It also further politicises the Fed and undermines its future independence.

This is not limited to the ECB, every National Central Banker does it.

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Sun Mar 17th, 2013 at 12:52:58 PM EST
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