Notwithstanding their record on price stability, the crisis has dented the credibility of central banks. The blame on central banks is wide ranging – loose monetary policies coupled with neglect of asset price developments, exclusive focus on inflation to the detriment of financial stability and lax and inept regulation that failed to keep pace with innovation.
There is resentment, if not outrage, against the famed independence of central banks; and there is an outcry for clipping their mandates and tightening the accountability mechanisms. 38. Beyond the short-term, the threat to the independence of central banks emanates from factors apart from public anger. Notably, the crisis saw unprecedented expansionary fiscal and monetary policies launched by governments and central banks in coordination.