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This paper extends the analysis of central bank independence to a model in which there is more than one policymaker. It shows that the degree of central bank independence as generally defined in the existing theoretical literature is only one of the influences on macroeconomic performance. The objectives of the fiscal authority, the commitment mechanisms available to the authorities and the nature of the policy game play a key role in determining the inflation rate and output in the economy. Furthermore, the model can be solved for the optimal degree of inflation aversion of the central bank. , a Working Paper and the authors) would welcome any comments on the present text Citations should refer to a Working Paper of the International Monetary Fund, mentioning the authors), and the date of issuance. The views expressed are those of the author(s) and do not necessarily represent those of the Fund.

Banks and Banking --- Inflation --- Public Finance --- Central Banks and Their Policies --- Price Level --- Deflation --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- National Government Expenditures and Related Policies: General --- Banking --- Macroeconomics --- Public finance & taxation --- Central bank autonomy --- Expenditure --- Central bank organization --- Prices --- Central banks --- Central bank mandate --- Banks and banking --- Expenditures, Public --- New Zealand

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This paper discusses key legal issues in the design of Board Oversight in central banks. Central banks are complex and sophisticated organizations that are challenging to manage. While most economic literature focuses on decision-making in the context of monetary policy formulation, this paper focuses on the Board oversight of central banks—a central feature of sound governance. This form of oversight is the decision-making responsibility through which an internal body of the central bank—the Oversight Board—ensures that the central bank is well-managed. First, the paper will contextualize the role of Board oversight into the broader legal structure for central bank governance by considering this form of oversight as one of the core decision-making responsibilities of central banks. Secondly, the paper will focus on a number of important legal design issues for Board Oversight, by contrasting the current practices of the IMF membership’s 174 central banks with staff’s advisory practice developed over the past 50 years.

Banks and Banking --- Public Finance --- Central Banks and Their Policies --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Taxation, Subsidies, and Revenue: General --- Financial Institutions and Services: Government Policy and Regulation --- Banking --- Public finance & taxation --- Financial services law & regulation --- Central bank legislation --- Legal support in revenue administration --- Central bank governance --- Bank supervision --- Central banks --- Revenue administration --- Central bank organization --- Central bank mandate --- Banks and banking --- Revenue --- State supervision --- United Kingdom

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This paper constructs a new index for measuring de jure central bank independence, the first entirely new index in three decades. The index draws on a comprehensive dataset from the IMF’s Central Bank Legislation Database (CBLD) and Monetary Operations and Instruments Database (MOID) and weightings derived from a survey of 87 respondents, mostly consisting of central bank governors and general counsels. It improves upon existing indices including the Cukierman, Webb, and Neyapti (CWN) index, which has been the de facto standard for measuring central bank independence since 1992, as well as recent extensions by Garriga (2016) and Romelli (2022). For example, it includes areas absent from the CWN index, such as board composition, financial independence, and budgetary independence. It treats dimensions such as the status of the chief executive as composite metrics to prevent overstating the independence of statutory schemes. It distills ten key metrics, simplifying current frameworks that now include upwards of forty distinct variables. And it replaces the subjective weighting systems relied on in the existing literature with an empirically grounded alternative. This paper presents the key features of the new index; a companion, forthcoming paper will provide detailed findings by country/region, income level, and exchange rate regime.

Banking --- Banks and Banking --- Central bank autonomy --- Central bank legislation --- Central bank mandate --- Central Banks and Their Policies --- Central banks --- Currency crises --- Currency --- Deflation --- Economic & financial crises & disasters --- Economics of specific sectors --- Economics --- Economics: General --- Exchange rate arrangements --- Foreign Exchange --- Foreign exchange --- Government policy --- Inflation --- Informal sector --- Macroeconomics --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Monetary Policy, Central Banking, and the Supply of Money and Credit: Other --- Price Level --- Price stabilization --- Prices

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Drawing on the 2016 update of the IMF’s Central Bank Legislation Database, this paper examines differences in central bank legal frameworks before and after the Global Financial Crisis. Examples from select countries show that many central bank laws have undergone changes in objectives, decision-making, accountability, and data collection. A wider cross-country survey illustrates the common occurrence of price stability in central bank objectives, and varying practices in defining financial stability, “independence” versus “autonomy,” and who within a central bank determines monetary policy. The highlighted facts illustrate the uses of the database and could be a starting point for further analyses.

Banks and banking, Central. --- Banker's banks --- Banks, Central --- Central banking --- Central banks --- Banks and banking --- Banks and banking, Central --- E-books --- Banks and Banking --- Finance: General --- Macroeconomics --- Public Finance --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- General Financial Markets: Government Policy and Regulation --- Central Banks and Their Policies --- Price Level --- Inflation --- Deflation --- Taxation, Subsidies, and Revenue: General --- Banking --- Finance --- Public finance & taxation --- Financial sector stability --- Central bank legislation --- Price stabilization --- Legal support in revenue administration --- Financial sector policy and analysis --- Prices --- Revenue administration --- Central bank mandate --- Financial services industry --- Government policy --- Revenue --- Russian Federation

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The finances of central banks is a topic of renewed interest: many central banks are posting significant losses due to the cost of monetary policy, over which central banks have no control. Conversely, operational expenses, over which the central banks have more control, is a subject of less attention. We use public income statement data from central banks to calculate a score for operational expense efficiency based on a stochastic frontier analysis. In addition, we offer potential explanations for the observed variations in efficiency levels across central banks. Our analysis reveals significant heterogeneity across countries and income groups. Central banks with a single objective demonstrate higher efficiency compared with those with multiple objectives. Regarding the output of price stability, central banks in low-income developing countries exhibit lower efficiency compared with central banks in emerging markets and advanced economies. Factors such as central bank independence, the depth of the financial system, and the degree of openness play a role in influencing efficiency levels. Our findings underscore the significance of well-defined objectives, the operating environment, and concentration on core activities in reducing inefficiency.

Aggregate Factor Income Distribution --- Banking --- Banks and Banking --- Central bank autonomy --- Central bank mandate --- Central Banks and Their Policies --- Central banks --- Currency crises --- Deflation --- Economic & financial crises & disasters --- Economic Development, Innovation, Technological Change, and Growth --- Economics of specific sectors --- Economics --- Economics: General --- Emerging and frontier financial markets --- Finance --- Finance: General --- Financial markets --- Financial services industry --- General Financial Markets: General (includes Measurement and Data) --- Government policy --- Income --- Inflation --- Informal sector --- Macroeconomics --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- National accounts --- Price Level --- Price stabilization --- Prices --- Trade: General