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Independent central bank mooted

Banking experts in Pakistan prefer political independence for the central bank, although they say the government is responsible for economic growth. These views have been expressed in the light of the resignation of Yaseen Anwar as governor of State Bank of Pakistan, which has again raised the issue of independence of the central bank. His predecessor Shahid Kardar also resigned when he found it difficult to get along with the then government. Former senior vice president of Allied Bank Mohammad Ashraf said the greater the independence a central bank enjoys, the lesser it is subject to political pressure. Under a direct control of a government, a central bank is prompted to easy credit policies particularly in the wake of elections or to finance government’s budget deficits, said Ashraf. Both the ex-governors were accommodating governments in this regard, he said. He also mentioned that a fair degree of independence is helpful to central banks in carrying out their supervisory responsibilities, enabling them to resist pressures to relax or strengthen regulatory standards depending on political winds.

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