The illusion of central bank independence

With the use of government bonds to back loans, the money that treasuries create is a shrinking portion of supply, and they have less control of liquidity, says Yanis Varoufakis.

CAPITALISM has few sacred cows left. It is time to question one of them: the independence of central banks from elected governments.

The rationale for entrusting monetary policy fully to central banks is understood: politicians, tempted during the electoral cycle to create more money, threaten economic stability.