The new role of central banks – Natixis

Rather than maintaining the fiction of independent central banks having an inflation target and thereby ensuring financial stability, it would be better to accept the idea that central banks are not independent, per Natixis.

Key quotes

“Central bank independence is a fiction since they are forced to intervene to prevent government insolvency crises: what they are doing is pure monetisation of public debt, which in theory is prohibited.”

“The inflation target has lost its meaning since money creation is no longer correlated with inflation in goods and services prices, but with inflation in asset prices.”

“Ensuring government solvency by monetising public debt is incompatible with the financial stability objective (stabilisation of asset prices).”