Central Bank: Independent Within the Government

The post-Second World War period marks the affirmation of the Interventionist State (that had already emerged strongly in the interwar phase), and the role of the state is extended to many sectors of the society. This has consequences on the institutional position and functions of central banks. Every vestige of their status as privately held companies disappears. Many of them are nationalised. Even being inside the public sphere, central banks are defined as “independent within the government”, which means that their decisions must not be ratified by the executive branch of government. Their relative autonomy is—to different extent—reaffirmed. In this intellectual environment, the powerful influence of Keynes’s thought, that emphasises the role of fiscal policy to sustain economic growth, is particularly present in both the U.S. and British central banks. An outlier is the Bundesbank, that gives a critical role to monetary control to defend price stability. The Bank of Italy maintains a pragmatic approach, keeping in mind its central role even beyond purely monetary matters.