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This paper presents an update of the Grilli-Masciandaro-Tabellini (GMT) index of central bank (CB) autonomy, based on CB legislation as of end-2003. The index is applied to a set of OECD and developing countries, and emerging market economies. For a smaller set of countries, the paper presents a reconstruction of the GMT index based on Cukierman (1992) and assesses changes in CB autonomy between 1992 and 2003. The results point to a significant increase in CB autonomy, in particular for developing countries. In most cases, this improvement has involved a three-stage process: an initial stage in which the political foundations for CB autonomy are laid; a second stage in which operational autonomy develops; and a final stage in which CBs gain further political autonomy in terms of policy formulation and the appointment of senior management.

Banks and banking, Central -- Law and legislation -- Developing countries. --- Banks and banking, Central -- Law and legislation -- OECD countries. --- Electronic books. -- local. --- Monetary policy -- Developing countries. --- Monetary policy -- OECD countries. --- Finance --- Business & Economics --- Banking --- Banks and banking, Central --- Monetary policy --- Law and legislation --- Monetary management --- Banker's banks --- Banks, Central --- Central banking --- Central banks --- Economic policy --- Currency boards --- Money supply --- Banks and banking --- Banks and Banking --- Finance: General --- Public Finance --- Central Banks and Their Policies --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- General Financial Markets: General (includes Measurement and Data) --- Taxation, Subsidies, and Revenue: General --- Monetary Policy --- Public finance & taxation --- Emerging and frontier financial markets --- Central bank autonomy --- Central bank legislation --- Legal support in revenue administration --- Financial markets --- Revenue administration --- Financial services industry --- Revenue --- Mexico

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We calculate indexes of central bank autonomy (CBA) for 163 central banks as of end-2003, and comparable indexes for a subgroup of 68 central banks as of the end of the 1980s. The results confirm strong improvements in both economic and political CBA over the past couple of decades, although more progress is needed to boost political autonomy of the central banks in emerging market and developing countries. Our analysis confirms that greater CBA has on average helped to maintain low inflation levels. The paper identifies four broad principles of central bank autonomy that have been shared by the majority of countries. Significant differences exist in the area of banking supervision where many central banks have retained a key role. Finally, we discuss the sequencing of reforms to separate the conduct of monetary and fiscal policies.

Banks and Banking --- Finance: General --- Inflation --- Central Banks and Their Policies --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- General Financial Markets: General (includes Measurement and Data) --- Price Level --- Deflation --- Banking --- Finance --- Macroeconomics --- Central bank autonomy --- Emerging and frontier financial markets --- Central bank credit --- Banks and banking --- Financial services industry --- Prices --- United Kingdom --- Banks and banking, Central. --- Monetary policy.