Officials of the European and U.S. central banks are highlighting a need to maintain central bank independence and suggest that interference from politics is hindering effective execution of monetary policy. "Central banks' balance sheets are becoming more and more exposed to economic risk and political pressure," said Klaas Knot, a member of the European Central Bank Governing Council. "Eventually, this may result in a substantial amount of negative capital in a central bank's balance sheet. This is undesirable because it could undermine a central bank's credibility."
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