SEEU Review vol. 5 Nr. 2 (pdf) - South East European University

SEEU Review Volume 5, No. 2, 2009
Going toward the real independence of
the central bank
Arjeta VOKSHI-ABAZI
Sulo HADERI
“A good central bank says “NO” to politicians”
The Economist. (1991)
Abstract
Monetary policy is the economic policy followed from monetary
authority. In Albania the monetary authority is the Bank of Albania. The
Bank of Albania (BoA) has to maintain price stability (Law on Bank of
Albania). From 2001, the BoA has announced its goal to gradually substitute
the monetary targeting regime with the new Inflation Targeting regime. In
order to implement this regime there is need to fulfill some conditions, one
of which is the independence of the central bank. Many economists have
discussed about this issue and different definitions of the Central Bank’s
independence have been given. The first section in this article, explains
briefly various definitions of the independence of the central bank. The
second section provides a comparative analysis of South-Eastern European
central banks’ independence. In the last section of the article we analyze the
situation in Albania, and calculate the governors turnover rate in an effort to
draw up a conclusion (at least theoretical one) about the real independence
of Bank of Albania. The last section answers the questions: Is the Bank of
Albania independent? What type of independence is achieved? What should
be improved to have an independent central bank?
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