Choosing Independence
Choosing Independence
This chapter focuses on postcommunist governments' initial choice to adopt legislation granting independence to their central banks, examining both the universal acceptance of such legislation and the specific cases of Hungary, Czechoslovakia, and its successor states—the Soviet Union/Russia and Kyrgyzstan. Legislating central bank independence does not mean that a government will necessarily respect its own laws in practice, but it does indicate that postcommunist governments found value in passing these laws. Examination of the initial choice processes in Hungary, Czechoslovakia, Russia, and Kyrgyzstan demonstrates concretely how postcommunist governments converged on legal central bank independence from different starting places and through internationally mediated mechanisms. Across the board, the international consensus on central bank independence, the external incentives to adopt it, and the atmosphere of deep domestic economic uncertainty ultimately made such legislation the preferred policy choice of these disparate postcommunist governments.
Keywords: postcommunist governments, central bank independence, Hungary, Czechoslovakia, Russia, Kyrgyzstan, domestic economic uncertainty
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