Abstract

Independent central banks are major centres of unelected power in contemporary capitalist societies. While critics allege that they are incompatible with democratic values, defenders argue that delegating monetary policy to an independent central bank is an important policy tool elected institutions may use to credibly commit to low inflation. This paper defends a moderate view that neither requires dismantling central bank independence nor turns a blind eye to its risks for the proper functioning of a democratic regime. It proposes a set of concrete constitutional rules that limit central bank power while allowing it to serve its core function.