A year ago, Andy Haldane, chief economist at the Bank of England lecture The Association of Economists at University College London extols the virtues of independent central banks. But his words sounded more resonant than ever.

“The government has a natural tendency, especially during elections, especially during elections,” he explained. The “inflation bias” that led to price runaways in the 1970s subsequently inspired a wave of central bank independence.

Today, nearly 90% of central banks in the world are classified as independent. However, as finance ministers battle record debt burdens, the Covid-19 crisis and rapidly rising inflation, there is growing concern that governments will increasingly use central banks.

The ultra-low interest rates for more than a decade are very suitable for the government, allowing debt to remain manageable even in a spiraling situation.Some governments explicitly pressure the central bank governor to adopt a more accommodative policy: when he was the president of the United States, Donald Trump notoriously called on the Federal Reserve “Fool” Reduce interest rates to zero and call potential negative interest rates a “gift.”

After the coronavirus lockdown caused a rapid economic rebound, inflation in most parts of the world may now worry some people, but it is also politically popular in some ways-not only because it reduces debt accumulation , Or promote ideological requirements, such as home ownership through cheap mortgages. In a populist speech at the Conservative Party meeting in October, British Prime Minister Boris Johnson urged companies to pay higher wages to employees.

Trump and Johnson’s remarks have led to some suggestions that the monetary policy decisions of the Federal Reserve and the Bank of England are more moderate and less “independent” than the economic data deserves.

The Bank of England’s interest rate hike last week may have weakened this claim to some extent. But since the inflation target is 2% and prices have risen by more than 5%, it is strange that it took so long to raise interest rates.

“The idea of ??an independent central bank today is fictitious,” said a former central bank governor who is now engaged in asset management. The asset manager said that compared with the huge asset bubbles caused by various fields from stocks to real estate, what is more structurally dangerous is that central bank officials have aligned with the interests of political leaders, evoking the awfulness of non-independent central banks. past.

It goes beyond monetary policy.one Recent UK initiativeA seemingly trivial but potentially significant plan is to ensure that the regulators of the Bank of England (and the Financial Conduct Authority) consider Britain’s competitiveness when formulating rules. When it introduced “light touch” regulation before 2008, it was a disaster with a global impact. Restoring it is the secret to further trouble.

Another less compelling proposal is equally ominous. In September, the UK Treasury Department issued a Consultation Document, “A review of the cash ratio deposit plan,” proposed to reform a long-term plan that requires commercial banks to provide funding for the Bank of England. The consultation not only suggested a shift to a different system, but also pointed out in passing that the new taxation will be “as part of the annual budgeting process and discussed with the UK Treasury.” This is a major deviation: the current CRD is free from government intervention for five years at a time.

Critics of the government’s relationship with the Bank of England argue that the subtle politicization of governance helps such reforms not be challenged. Since 2014, Conservative Party colleague Dido Harding has been a member of the regulatory “court” or board of directors; Ron Kalifa, a financier who joined her in 2019, is the author of a fintech review commissioned by the Ministry of Finance. The Governor of the Bank of England, Andrew Bailey, is considered to be more politically conscious than many of his predecessors, and he was chosen by the number 10 candidate rather than recommended by a Treasury official.

Britain is not alone. In the United States, Fed Chairman Jay Powell has been criticized in some ways, first for succumbing to the will of the moderate Trump White House, and later for the tough attitude inspired by President Joe Biden and Treasury Secretary Janet Yellen. The governor of the Bank of Japan Haruhiko Kuroda, the world’s most enthusiastic supporter of government-friendly quantitative easing policies, is also believed to have blurred the line between political and monetary policy.

“So what does the independence of the central bank do for us?” Haldane asked at the end of his UCL lecture. He concluded that it helped control inflation and helped maintain financial stability at least for the past decade. “Protect [it] And system [it is] Embedded is now more important than ever. “So.

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