A Comparative Study of Global Central Bank Independence and Transparency, and their Effects on Monetary Policy

The two decades preceding the 2008 global financial crisis was an era of tremendous change to the governance structures and practices of central banks around the world. In both developed and developing economies, measures of central bank independence increased across the board.

The Capstone project was a comparative study of global central bank independence and transparency, and their effects on monetary policy.  

The study focused on the following questions:

How do major global central banks compare both in their degrees of independence and transparency?  What is the history on central banks' independence, and how has it evolved or been challenged in recent years?  How have central banks voluntarily become more transparent and how have recent regulations required greater transparency?

To answer these questions the Capstone team focused on how the Fed, the ECB, the Bank of England, and the Bank of Japan have navigated the crisis by deploying unconventional policies, how transparent they have been, and to what extent these actions have triggered potential challenges to their independence.

The end goal of the project was to determine how changes in independence and transparency affect central banks' monetary policy and crisis response in the future.