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While operating with some degree of autonomy, the PBC does not have central bank independence and is politically required to implement the policies of the Chinese Communist Party (CCP).[20] The CCP committee secretary of the PBC is the most powerful position in the bank and can hold more sway than the governor. The current CCP committee secretary is Pan Gongsheng.[21]

https://en.wikipedia.org/wiki/People%27s_Bank_of_China

I was reading this, and I was wondering if there are different level of autonomy. Certainly, there must be different levels of autonomy, because the laws and regulations allow the government to exercise different level of control and oversight. Even if in China, there's some degree of autonomy, they have much less autonomy than in the U.S., so I suppose there are different level of autonomy among democratic countries too.

Among democratic countries, which central bank is the least autonomous? By democratic, I mean full democracies. You can refer to: https://en.wikipedia.org/wiki/The_Economist_Democracy_Index

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  • Is this specifically about interest rates and monetary policy? It's probably easier to compare that, than also take into account other functions such as banking regulation, and providing banking services.
    – Stuart F
    Oct 30, 2023 at 14:46

2 Answers 2

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It's probably not possible to definitively answer this Q, but Costa Rica is a full democracy according to the index you linked (although only since 2018), but until recently [June 2023] they had the finance minister sit on the board of the bank. There was apparently some IMF pressure because of that too:

In October 2020, the IMF issued a safeguards assessment advising improvements to “the BCCR’s operational autonomy and governance arrangements”. It also recommended Costa Rica’s government fill one of the external member positions.

There are some attempts to formally quantify central bank independence, e.g. as noted in this paper by the Central Bank of Uruguay, but they are pretty old, from the 1990s, and I'm not sure they are regularly updated/recalculated. I found a 2022 IMF working paper about Latin America (so other regions are not covered there) but even in that one the (independence) data is from the 1990s at best.

enter image description here


And the least independent appear to be Japan and the UK according to the dataset for 2017 that goes with this paper by an Ireland-based academic (Romelli). The CBIE scores that the author calculates are as low as those of Turkmenistan or Belarus (all around 0.33). [Higher scores indicate more independence.] Australia is rated not much higher with 0.36, on par with Cuba and Iran. Some other interesting ties in that data set: USA is on par with Uzbekistan (and Kazakhstan) with 0.63 or so, and lower than the PRC's with 0.68 or so. As for Costa Rica, it's rated on par with Switzerland and Turkey's, with around 0.83-0.84, and which are rated only slightly above Venezuela that gets 0.82. YMMV. A lot seems to depend on methodology in such matters.

As for methodology, from some 2019 slides of the author: "42 questions on central bank design across 6 dimensions: 1) Governor and Central Bank Board; 2) Monetary Policy and Conflicts Resolution; 3) Objectives; 4) Lending to the Government; 5) Financial Independence; 6) Central Bank Reporting and Accountability. Overall index computed as the aritmetic average of the scores across the six dimensions".

BTW, Romelli's index appears to have been around since at least 2019, but people at the IMF don't seem to dig it. His 2019 paper is not incredibly cited, with some 50 citations in Google Scholar. But according to his slides, his is the only new index proposed/updated since the 1990s, so there's that.

OTOH ther's a slightly older paper by (UK-based) A.C. Garriga (2016) that has approximated ten times more citations. It uses a 'de jure' approach focusing only on legislation; this has been the more traditional approach. And the author has an updated the dataset in 2023 (although without a new paper, AFAICT). More or less the latest data included is for 2012 though. But as a spot check:

  • Japan has weighed score of 0.44 and an unweighted one of 0.55.
  • UK has 0.59 and respectively 0.70.
  • Australia 0.35 and 0.25.
  • US : 0.4 and respectively 0.48.
  • Costa Rica: 0.73 and 0.73.

And for [some] comparison

  • China : 0.5 0.55
  • Uzbekistan: 0.64 and 0.6

So there are some agreements, but also disagreement with Romelli. In particular, the UK or Japan aren't anywhere near as low on the independence scale according to Garriga, but Australia is. And the lowest (among the "full democracies") might actually be Taiwan according to Garriga: scores of 0.27 and 0.19 respectively.

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  • I think you may have misread the data. Japan and the UK have low scores on Romelli's dataset.
    – user103496
    Oct 29, 2023 at 2:48
  • @user103496: and I think you misread the answer. Oct 29, 2023 at 2:48
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    It would be better to refer to more or less independent rather than better or worse. Oct 29, 2023 at 7:54
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    @njzk2: it's standard viewpoint among economists. Anyhow, I'll change the wording, since you're the 2nd one to object to it. Oct 29, 2023 at 18:28
  • 1
    @Fizz economics is a very political field, I'm not sure it's fair to assume a "standard" viewpoint
    – njzk2
    Oct 29, 2023 at 18:29
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Japan scores lowest on David Romelli's Central Bank Independence (Extended) index (2022) (out of the 24 "Full Democracies" on the Economist Democracy Index, 2022):

enter image description here

Index is from 0 (least independent) to 1 (most) and for 2017.

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  • 3
    I'm curious how countries in the Euro, who therefore have the same central bank can be given different scores? Oct 29, 2023 at 7:51
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    @JackAidley: The ECB manages the euro, but individual countries' still have their own central banks with some responsibilities and powers, for example lending to their governments or supervising the financial sector. But having said that, the scores of the 20 Eurozone countries indeed hardly differ on this index (10 countries 0.912, 9 countries 0.8955, and 1 country Croatia 0.862).
    – user103496
    Oct 29, 2023 at 8:19

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