INDIA and South Africa have recently experienced rather unedifying episodes related to the leadership of their central banks.Raghuram Rajan was recently harassed out of his job as the governor of the Reserve Bank of India by politicians belonging to the ruling Bharatiya Janata Party (BJP) party.The South African Reserve Bank, which has remained free of noticeable political interference, is having to manage signs of unhappiness about its position from senior governing party politicians aligned to President Jacob Zuma.These facts represent potentially grave threats to the independence of the countries’ central banks and, by extension, to the proper functioning and credibility of key state institutions and economic performance.There are still vigorous debates globally about central bank independence. I would argue that whatever the formal legal or constitutional prescriptions, it is imperative that the mandate and the decisions of a country’s central bank are understood and respected. ...

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