Central banks that provide public benefits—like low inflation, financial stability and secure forms of payment—should not be influenced by commercial interests. With respect to political influence, governments have many public policy priorities—health, education, industry and trade, for example. Sometimes those policy pursuits can come into conflict with a central bank’s core mandate of ensuring low and stable inflation. That’s another reason why independence matters.
The desire to have a public entity separate from both the banking sector and the political process, whose job is to guide the economy in the long-term best interests of its citizens, is what’s behind the existence of central banks around the world. And it’s what led to the creation of the Bank of Canada in 1934.