Its third article states that “the Bank shall have as its purposes to look after the stability of the currency and the normal functioning of internal and external payments.” It then adds that “the authority of the Bank, for these purposes, shall include regulating the amount of currency and credit in circulation, the performance of credit transactions and foreign exchange, as well as the issuance of regulatory provisions regarding monetary, credit, financing and foreign exchange matters.” In addition, it establishes that “no public expenditure or credit of any nature may be financed either directly or indirectly with loans granted by the Bank.” Finally, article six states that “when passing its resolutions, the Board shall consider the general orientation of the Government’s economic policies.” This is a clear mandate for the Central Bank of Chile, by which it establishes instruments and mechanisms for the designation and removal of Board members, as well as vehicles for coordination with the Executive. In addition, its autonomy is further reinforced and legitimated through the achievement of said objectives and by the Bank’s communication and transparency policy, whose effects go far beyond the provisions in the law regarding the obligation to inform about its decisions. In this presentation I will address some of the main elements concerning the autonomy of central banks, as well as an evaluation of the principal accomplishments of the past twenty years. The reasons for pursuing autonomy High inflation is costly for society because it is associated with higher price volatility, which distorts resource allocation.
2/2  BIS central bankers' speeches