This caused huge economic and social losses, impacting on our development possibilities and leading to changes in citizens’ behavior. In fact, portfolio dollarization, fiscal and financial dominance, and the negative correlation between changes in bank savings and exchange rate fluctuations are some of the distinctive features of this process.
The research findings were clear: the relation between central bank independence and inflation is a negative one, and this, without paying a price in terms of growth. In other words, countries that reinforce their central banks’ independence attain low inflation with no impairment to growth. This lesson and experience gained in countries with independent central banks, particularly in Germany, also influenced decision makers.