Central banks around the world that are _____ are most effective

Question

Quizplus · Accepted Answer

Central banks that are independent of political influence are able to make decisions that are solely based on economic factors rather than political pressure. This allows for more effective monetary policies and for the central bank to maintain credibility with market participants. Controlled by political parties or those elected by popular vote can lead to short term policies driven by political agendas which can negatively impact the economy. A central bank run by those appointed for life may also be subject to political influence if the appointing authority has political motivations.

Central Banks Around the World That Are _____ Are Most