Opinion | Can RBI, other central banks survive the age of populism?
6 years, 2 months ago

Opinion | Can RBI, other central banks survive the age of populism?

Live Mint  

Is central bank independence the next casualty of the age of populism? The government wants the central bank to loosen lending restrictions — to fuel economic activity and jobs growth — and turn over more of its cash reserves, presumably to fund populist spending ahead of next year’s elections. Meanwhile, in Europe, the populists who have seized power in Italy spent the past week attacking European Central Bank President Mario Draghi, a fellow Italian, after he warned that Italy’s borrowing costs would escalate unless it kept to euro-zone fiscal restrictions. Luigi di Maio, the head of the populist Five Star Movement and Italy’s deputy prime minister, complained that Draghi was “poisoning the atmosphere.” Over the past year, three of the ECB’s 19 representatives from national central banks have been dragged into local legal disputes; others have faced pressure to resign. In the quarter-century since Alesina and Summers wrote their seminal paper, the relationship between central bank independence and inflation has been less obvious in the data; Summers himself walked back his claim a bit recently.

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History of this topic

Key decisions of central bank cannot be left to politicians, says former RBI Governor Subbarao
8 months, 3 weeks ago

Key decisions of central bank cannot be left to politicians, says former RBI Governor Subbarao

The Hindu  

Former Governor of the Reserve Bank of India Duvvuri Subbarao on April 24 said key decisions tasked to the central bank such as reining in inflation änd ensuring price stability cannot be delegated to politicians as the latter have a short cycle. “You can’t leave those decisions to politicans.,” the former IAS officer said, pointing out that decisions on price …

Reimagining how the Reserve Bank functions
2 years ago

Reimagining how the Reserve Bank functions

Hindustan Times  

The Supreme Court judgment on demonetisation last week appears to have reignited the debate on the relationship between the Reserve Bank of India and the Union government. The parliamentary committee wants to ensure that financial regulators such as RBI are adequately prepared to support India’s growth journey, the chair of the committee, Jayant Sinha, said in an interview to Mint …

Opinion | The whys and what ifs of central bank autonomy
5 years, 11 months ago

Opinion | The whys and what ifs of central bank autonomy

Live Mint  

Why should central banks be autonomous and what are the consequences of the government infringing on such autonomy? For example, voters elect a government to create more jobs, but the central bank can keep interest rates high to stifle investment and, consequently, job creation. India’s history since Independence is one of high state and central government deficits, a weak banking …

Opinion | Why the Reserve Bank of India needs de jure independence
6 years ago

Opinion | Why the Reserve Bank of India needs de jure independence

Live Mint  

And so it has begun. Since then, newly appointed governor Shaktikanta Das, a veteran bureaucrat and loyal lieutenant of the Narendra Modi government, has wasted little time in making clear that it is back to business as usual, as it was in the good old days: cosy consultations with stakeholders such as the chiefs of public sector banks and vague …

Opinion | Finding the right balance at the central bank
6 years ago

Opinion | Finding the right balance at the central bank

Live Mint  

The regrettable mechanics of the recent change of guard at the Reserve Bank of India raises some important questions, some long overdue, about the institution’s accountability, transparency and autonomy, and the relevance of having a governor with a strong backbone. The new approach internalised that the adoption of modern monetary management in India also favoured individuals with strong macroeconomics- or …

RBI complains too much; its role has been better defined, powers expanded over four years of Narendra Modi govt
6 years, 1 month ago

RBI complains too much; its role has been better defined, powers expanded over four years of Narendra Modi govt

Firstpost  

There is a deluge of expert and academic opinion on the current Reserve Bank of India - Government ‘confrontation’. To quote: “Governments that do not respect central bank independence will sooner or later incur the wrath of the financial markets, ignite economic fire and come to rue the day they undermined an important regulatory institution.” Now, for a top RBI …

Opinion | A thin line divides RBI autonomy, alignment
6 years, 1 month ago

Opinion | A thin line divides RBI autonomy, alignment

Live Mint  

The tawdry, and discreditable, public feud between the government and the Reserve Bank of India seems to indicate that, in the midst of many shortages, the government is hoarding reserves of surplus political capital. Things must have gone terribly wrong and relations deteriorated irreconcilably for the government to situate a routine central bank board meeting squarely in the piazza of …

Opinion | Revisiting accountability at Reserve Bank of India
6 years, 2 months ago

Opinion | Revisiting accountability at Reserve Bank of India

Live Mint  

“The most independent central bank is not likely to be a socially optimal central bank,” economists Guy Debelle and Stanley Fischer wrote in a paper titled How independent should a central bank be?Fischer is a former vice chairman of the US Federal Reserve and was professor of economics at Massachusetts Institute of Technology when the paper was written in 1994. …

The political economy of central bank independence
6 years, 2 months ago

The political economy of central bank independence

Live Mint  

Economic affairs secretary Subhash Chandra Garg’s tweet in reply to RBI deputy governor Viral Acharya’s hard-hitting speech was widely deplored, but he did have a valid question. Critics have said that the increasing emphasis on central bank independence is the result of the power of the financial sector to assert its interests, or the interests of creditors, over those of …

Opinion | RBI’s independence needs to be protected
6 years, 2 months ago

Opinion | RBI’s independence needs to be protected

Live Mint  

The relationship between the government and the Reserve Bank of India used to be cooperative and productive, but has vitiated over the past decade. Public airing of differences must be eschewed and the government must take steps to strengthen RBI’s independence. He also warned that governments that do not respect central bank independence will sooner or later incur the wrath …

Opinion | The ball was always in the government’s court
6 years, 2 months ago

Opinion | The ball was always in the government’s court

Live Mint  

Amid speculation that Reserve Bank of India governor Urjit Patel might quit, the government did well on Wednesday to issue a statement, highlighting that the autonomy of the central bank is essential. Section 7 of the RBI Act says that “The Central government may from time to time give such directions to the bank as it may, after consultation with …

Public Airing Of Rift Between RBI, Govt Must Stop: Rakesh Mohan
6 years, 2 months ago

Public Airing Of Rift Between RBI, Govt Must Stop: Rakesh Mohan

The Quint  

Public sparring between the central government and the central bank is not healthy for an economy like India, cautioned former Reserve Bank of India Deputy Governor Rakesh Mohan. “I do hope that saner heads will prevail.” On Friday, RBI Deputy Governor Viral Acharya, in a public speech, aired concerns over some of the ways in which the government could impinge …

The RBI Shouldn’t Mix ‘Autonomy’ With the ‘Scope’ of Its Mandate
6 years, 2 months ago

The RBI Shouldn’t Mix ‘Autonomy’ With the ‘Scope’ of Its Mandate

The Quint  

Let’s take the proposition further. If, indeed, technocrats are more capable of taking long-term decisions, why leave fiscal policy in the hands of elected representatives? The reason that fiscal policy has not been delegated to technocrats is that it has multiple welfare and distributional effects that are best-weighed by elected representatives. Monetary policy, with its focus on inflation, is believed …

RBI-government spat shows central bank's independence, says Morgan Stanley India research head Ridham Desai
6 years, 2 months ago

RBI-government spat shows central bank's independence, says Morgan Stanley India research head Ridham Desai

Firstpost  

Mumbai: American brokerage Morgan Stanley on Tuesday said the Reserve Bank is more independent than it was in the past and the debate triggered by deputy governor Viral Acharya last week illustrates the progress on this front. The fact that it is there in the media, the fact that it is there in the open, suggests that we are a …

RBI vs Narendra Modi government: Public spat won’t help, but India’s best bet is not to mess with its central bank
6 years, 2 months ago

RBI vs Narendra Modi government: Public spat won’t help, but India’s best bet is not to mess with its central bank

Firstpost  

Almost every RBI governor, be it Y V Reddy or D Subbarao, have pitched for central bank autonomy in public forums inviting the wrath of the government of the day. The turf war between the Reserve Bank of India and the Narendra Modi government on the subject of the central bank’s autonomy is out in the open and is turning …

Viral Acharya's comments on 'effective independence' of RBI: Employees association seeks central bank's autonomy
6 years, 2 months ago

Viral Acharya's comments on 'effective independence' of RBI: Employees association seeks central bank's autonomy

Firstpost  

Kolkata: Days after deputy governor Viral Acharya raised concerns over the central bank’s autonomy, the Reserve Bank employees association Monday came out in support of the views, saying “undermining the central bank is a recipe for disaster” and government to stop nibbling at its autonomy. Delivering the AD Shroff memorial lecture last week here, Acharya said governments that did not …

Viral Acharya is right; RBI should be left alone to do its job, not coerced for political reasons
6 years, 2 months ago

Viral Acharya is right; RBI should be left alone to do its job, not coerced for political reasons

Firstpost  

The most recent debate has been on the independence of the central bank. Next, on the issue of control of public sector banks, the central bank is unable to do what it has done for private banks especially on governance issues as this is where the problem is founded. Also, in the past, when some private banks were down under, …

Opinion | Protecting the central bank’s independence
6 years, 2 months ago

Opinion | Protecting the central bank’s independence

Live Mint  

Reserve Bank of India deputy governor Viral Acharya’s A.D. Shroff Memorial Lecture last week was the second occasion within a month when he chose to deliver a strong message. European Central Bank president Mario Draghi recently raised the issue of the threat to central banks’ independence from governments. It is also in the interest of the government that the central …

Signs of policy struggle between RBI and govt
6 years, 2 months ago

Signs of policy struggle between RBI and govt

Live Mint  

Mumbai: In a sign of a mounting policy struggle between the Reserve Bank of India and the government, a top bank official warned on Friday that undermining a central bank’s independence could be “potentially catastrophic”. “Governments that do not respect central bank independence will sooner or later incur the wrath of financial markets, ignite economic fire, and come to rue …

RBI deputy governor bats for its independence
6 years, 2 months ago

RBI deputy governor bats for its independence

Live Mint  

Mumbai: Reserve Bank of India deputy governor Viral Acharya on Friday stressed the importance of a central bank’s independence and said direct intervention and interference by the government in the operational mandate of the central bank negates its functional autonomy. This way, the institutional arrangement of independence, transparency and accountability to the public not only balance but also strengthen the …

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