How Independent Are European Central Banks?

Central banks are supposed to be completely independent, The European Central Bank or ECB diligently took this position as the hallmark of its system.

Thanks to the Greek and related European Union bailout, the central bank in control of the Euro is no longer the independent vehicle it set out to be. It’s now buying government bonds. This monetizes debt and adds to inflation the ECB is supposed to curtail.

In Great Britain, the Bank of England is a centuries older counterpart. The BOE, too, has always been entrusted with being an independent, non-political, overseer of the British pound.

The BOE, however, now is “suggesting” budget manipulations by the new Chancellor of the U.K.’s Exchequer. This is definitely a no-no, if the British central bank is to remain independent.

Americans have little to crow about. The Federal Reserve in the U.S. has slowly been losing its independence as well, as I have commented over the past year.