A critical analysis of central bank independence and governance in Australia and Bangladesh

This study examines central bank independence and governance (CBIG) in Bangladesh and Australia. It applies a unique index model of Ahsan, Skully and Wickramanayake (2008) to assess their respective legal, political, price stability objectives, exchange rate policies, monetary policy and deficit financing practices, transparency and accountability positions from 1991 to 2008. While the model shows CBIG is much weaker in Bangladesh than in Australia, the Bangladesh Bank’s CBIG shown considerable improvement over the period. These findings suggest that the Government of Bangladesh might learn from Australia’s experience with Reserve Bank of Australia and delegate further power and authority to Bangladesh Bank as well as lessen its political interference.<br />