Today at the IMF, the Governor of the People’s Bank of China, Zhou Xiaochuan, gave the Michel Camdessus Central Banking Lecture in Washington, D.C.
With China’s economy undergoing a transition, Governor Zhou spoke about managing monetary policy with multiple objectives, and the independence of central banks.
“For central banks with a single objective, it is relatively easy to be independent. However, if a central bank has multiple objectives, it may be harder to be immune from the political reality.”
Zhou also discussed the role of central banks in economies undergoing a transition to a market economy.
“If central banks do not promote financial reforms or development of financial markets, there would be no healthy financial institutions or market mechanisms, let alone smooth transmission of monetary policy. Furthermore, like other emerging market economies, transition economies have a low level of development and hoped to make up for the ‘lost decades’.”
You can watch Governor Zhou’s speech and his discussion with IMF Managing Director Christine Lagarde.