Question

Discuss the importance of central bank independence and transparency

Answer 1

Central banks independence and transparency :

It is important that the Central Bank is independent and transparent because when the central bank is independent and free from any political influence to ensure that the prices are stable. This helps to keep inflation low and helps maintain stability in the economy. The central bank independence is important so that it can set its own polices weather of targeting inflation, controlling money supply. If central bank is not given independence and if it is under political influence it shall impair its ability to curb inflation .

Transparency is important so that Central bank is accountable to the public and transparent to the public and are responsive to the public. the Central bank should be accountable  for its actions to the public in general.