Martin Wolf has a piece today suggesting that central banks' independence is under threat.

FT.com / Columnists / Martin Wolf - Much ado about central bankers

He also makes some other serious points mainly about the UK,

"at close to zero official interest rates, the boundary between monetary and fiscal policy erodes; governments are running huge fiscal deficits, particularly in the UK and the US, which threaten monetary stability; and, finally, those in charge wish to divert blame for the disaster.

Indeed, Mr King is not the only central banker to be under attack. US legislators savaged Ben Bernanke, chairman of the Federal Reserve, over his role in Bank of America’s takeover of Merrill Lynch. Astonishingly, Angela Merkel, chancellor of Germany, has directly attacked unconventional policies, including those pursued by the European Central Bank."

and

"Mr King has made four points, all critical of the government: first, contrary to the views of the Treasury, “if banks are thought too big to fail, then . . . they are too big”; second, the Bank of England has “a new statutory authority for financial stability ... [But] it is not entirely clear how the Bank will be able to discharge its new statutory responsibility if we can do no more than issue sermons or organise burials”; third, he has not been consulted on the forthcoming financial services white paper; and, last, as he told the Commons Treasury committee: “If the economy were to recover along the path assumed in the Budget projections of GDP then I think the time over which deficits need to be reduced is likely to have to be faster than was implied by [the Budget] projection.”

Let us start with a simple question: is the governor correct on the substance? The answers are: yes, yes, yes and yes. While size is not the sole consideration, private businesses must not operate freely if they are not subject to the fear of bankruptcy"


Trying times...