Andrew G Haldane: What has central bank independence ever done for us?

Speech by Mr Andrew G Haldane, Executive Director and Chief Economist of the Bank of England, at the UCL Economists' Society Economics Conference, 28 November 2020.

The views expressed in this speech are those of the speaker and not the view of the BIS.

I am delighted to be giving this talk at the UCL Economists' Society conference (even though it is on a Saturday). Many congratulations to the organisers for assembling such an excellent array of speakers from around the world.

I want to discuss a topic close to my own heart – central bank independence. In many respects, central banking came of age in the 20th century. At its start, the world had only 18 central banks (Chart 1). Most did not have a well-defined statutory, much less independent, role in setting monetary and financial stability policies. They operated, by and large, as an operational agent of government.

By the end of the 20th century, the world had around 200 central banks, pretty much one for each nation state. The fraction of them with operational independence for the setting of policy had risen to 80–90% (Chart 2). Central banks and their independence had become an international norm in the space of a century.