CENTRAL BANKING AND ECONOMIC TRANSITION

Abstract

The increasing independence ofcentral banksfrom governments in a greater number ofstates is the central preoccupation ofthis study by Nigel M. Healey and Janet Ilieva from Manchester Metropolitan University. The writers point out the fact that this trend can be observed both in industrialized and in developing countries. The reforms that grant greater autonomy to central banks are realized alongside great economic transformations, especially in the central and eastern European countries where new monetary policies are established. The writers analyze the requirements for more autonomous central banks in the present day, and try to shed light upon the connection ofhigh and persistent inflation to the necessity o f greater indepenoence for central banks. In this study, the anatomy ofthe transition from a centrally-planned economy to a free market economy is presented, with an emphasis on the process of liberalization continuing since 1989 and its effects on monetary policies.