Letter: Case against freeing the Bank

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The Independent Online
Sir: Goldman Sachs economist Gavyn Davies ("Critics of Bank independence miss the point", 12 May) fails to prove that there is a causal relationship between central bank independence and low inflation. The Treasury Select Committee in its 1993 report said "there is no conclusive statistical evidence of a causal relationship between the status of the central bank and inflation performance."

Mr Davies and his friends argue that monetary policy is too important to be left to mere politicians. Then we might as well sub-contract the running of the entire economy to Goldman Sachs.

The case against independence for the Bank was put to the Treasury Committee by Sir Bryan Hopkins and Sir Douglas Wass: "The officials of the Bank of England are able and conscientious men who are not unaware of economic, social and political stresses in the community. Entrusted with this essentially political responsibility, they would discharge it with intelligence and a strong sense of duty: they would do their best with it. But it remains that it is inherently wrong to give such a responsibility to central bankers. Quite simply, it is not their job: it is the proper responsibility of the elected representatives of the democracy and should stay with them."


(Hackney North and Stoke Newington, Lab)

House of Commons

London SW1