The Independence Of The Central Bank Research

Regardless of the past or the present, the issue of central bank independence (CBI) has always been a most debatable question in the field of finance whether at home or at abroad. Because central bank is a most important public power institute, the research on the issue of central bank independence, especially in transforming China, has both theoretical and practical significance.Generally, it is believed that the central bank independence is the ability to decide by the central bank to make and enforce the monetary policy. First, the dissertation discussed the relation between the central bank independence and the economic performance simply. We found that the central bank independence had an inverse relation with inflation, but no significant relation with the growth rate. It reflects that it is beneficial to increase the central bank independence to cure inflation, also stable price is the necessary condition for sustained, steady and fast economy growth. Therefore, increasing the central bank independence are not only beneficial to economy growth, but also prevent great fluctuation of economy. Comparative research on Germany federal bank, U.S. Federal Reserve System and Europe Central Bank, proves that all the developed countries have higher independent central banks. After the world war two, the west developed counties with high independent central bank, such as U.S., Germany, experienced low inflation, but their growth rate were not lower than those countries with low central bank independent central bank, such as U.K., France. That is, strengthen the central bank independence need not on the expense of economy growth.The dissertation expounded in detail the political-economic circle theory, alternative selection theory, dynamic inconsistency theory and the government inflation tax maximum theory. Based on these theories, evidence research on the central bank independence of China was conducted, which manifested that the independence of The Central Bank had increased significantly but not enough. Consider the different social institution with west counties, the insufficient independence of Chinese Central Bank led to political-economic circle, the government pursuing inflation taxes maximum, alternative selection and dynamic inconsistency. Finally, suggestions against the causes of low independence of Chinese central bank were put forward.