IMF Working Papers

A New Measure of Central Bank Independence

By Tobias Adrian, Ashraf Khan, Lev Menand

February 23, 2024

Download PDF Order a Print Copy

Preview Citation

Format: Chicago

Tobias Adrian, Ashraf Khan, and Lev Menand. A New Measure of Central Bank Independence, (USA: International Monetary Fund, 2024) accessed October 8, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper constructs a new index for measuring de jure central bank independence, the first entirely new index in three decades. The index draws on a comprehensive dataset from the IMF’s Central Bank Legislation Database (CBLD) and Monetary Operations and Instruments Database (MOID) and weightings derived from a survey of 87 respondents, mostly consisting of central bank governors and general counsels. It improves upon existing indices including the Cukierman, Webb, and Neyapti (CWN) index, which has been the de facto standard for measuring central bank independence since 1992, as well as recent extensions by Garriga (2016) and Romelli (2022). For example, it includes areas absent from the CWN index, such as board composition, financial independence, and budgetary independence. It treats dimensions such as the status of the chief executive as composite metrics to prevent overstating the independence of statutory schemes. It distills ten key metrics, simplifying current frameworks that now include upwards of forty distinct variables. And it replaces the subjective weighting systems relied on in the existing literature with an empirically grounded alternative. This paper presents the key features of the new index; a companion, forthcoming paper will provide detailed findings by country/region, income level, and exchange rate regime.

Subject: Central bank autonomy, Central bank legislation, Central bank mandate, Central Banks, Exchange rate arrangements, Foreign exchange, Price stabilization, Prices

Keywords: Audit authorities, C. IMF Central Bank Legislation Database, CBLD data coverage, CBLD search category, Central bank autonomy, Central bank independence, Central bank legislation, Central bank mandate, CEO independent, Exchange rate arrangements, Governance, Middle East and Central Asia, Monetary policy, Price stabilization, Transparency

Publication Details

  • Pages:

    26

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2024/035

  • Stock No:

    WPIEA2024035

  • ISBN:

    9798400268410

  • ISSN:

    1018-5941