Treasury support linked to operational freedom

As many governments fail to guarantee fiscal backing, a central bank's financial independence is relevant to its operational freedom, research by the International Monetary Fund finds.

By looking at 135 central bank laws and recapitalisation provisions, the research finds that even if the Treasury is responsible for maintaining the financial strength of a central bank, it may do so in a purely cosmetic fashion. As treasuries have frequently failed to provide central banks with genuine financial

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