2010-10-04

Central banks are not all-powerful

One of the reasons (among many) Presidential candidate and Congressman Ron Paul's efforts to end the Federal Reserve are often met with a chuckle is because people cannot imagine the central bank could be dissolved. Although a private institution, the Fed does operate with government approval and when was the last time the federal government voted to abolish a major agency or department?

Historically, however, central banks have been abolished in the United States. And now we have evidence in the present day.

BOJ Independence Challenged as Japan Deflation Continues
Your Party, an opposition group, plans to submit a bill in the Diet session running through December that would give the government a greater role in BOJ policymaking. Ichiro Ozawa, a former challenger to Prime Minister Naoto Kan whose calls for currency intervention and enlarged fiscal stimulus have been adopted by Kan, made a similar proposal last month.
Your Party is the Japanese upstart party that bears some similarities to the U.S. tea party movement. They cannot move the legislation without help because the party only has seats in the upper house, but expect this bill to move forward in some form.

Here's a Wall Street Journal article from earlier this year discussing central banks and political threats to their independence.

Crisis Threatens to Curb Central Banks

No comments:

Post a Comment