Central Bank Independence Philosophy, principles and Measurement Methods

Abstract

The mechanisms of cash issuance that were required by the Gold Standard in all its stages did not leave the way for the monetary or governmental authorities to interfere in the issuance process, as the strict restrictions that the issuance banks operate according to are considered as a wall that protects them from any government interference or anything else, and they were not in at that time, it was born after the problems of independence, dependency, and the limits of intervention. But after the abandonment of the gold standard in its last form, which is the exchange with gold, the expiration of the Bretton Woods Agreement in the early 1970s, and the abandonment of the United States' pivotal role in the global monetary system, monetary systems emerged that allow countries the freedom to issue money and reduce the value of their currencies, and problems and influences or the disadvantages of government intervention in the cash issuance process in countries whose governments try to extend their power and authority over central banks. The voices of researchers began to appear in carving the concept of Independence as a critical term, Monetary Term, discussing the philosophy on which it is based and defining the principles under which it operates. Debates raged between supporters and opponents of independence. At the same time, there were economic researchers working on laying the foundations of measurement and quantification and building mechanisms that determine the degree of independence and its extent in an ordinal, discretionary or numerical form and indicate the most important doors from which government intervention comes.