Free Banking and the Challenges of Information Uncertainty

Recovering From The Global Financial Crisis: Achieving Financial Stability In Times Of Uncertainty

Theories that appear to suggest that absolute independence exists (i.e., “the theory that recognizes no limits on central bank independence, so long as the bank itself is reliably pre-committed to achieving price stability”), indeed, cannot be sustainable. A sufficient and appropriate degree of central bank independence is definitely necessary for the goal of achieving price stability. However, despite the levels of independence claimed to be enjoyed by several central banks, recent events indicate shifts in focus of monetary policy objectives by various central banks, notably, that of the Fed Reserve. The impact of political and government influences on central banks’ monetary policies has been evidenced from the recent financial crisis and in several jurisdictions………..