The nature of Central Bank Independence: historical background and rise in the era of financialization

Abstract

This article brings back the debate on central bank independence from its historical
origins and its relation to financialization. With financial dominance, States have less influence
over central bank policies as they gain greater action capacity through monetary policy
strengthening. Central bank independence is an expression of financialization as it makes
the monetary authority more susceptible to financial market pressures and simultaneously
limits the participation of the State and society in conducting monetary policy.

JEL Classification: E58; B26.