The Central Bank’s
Senior Deputy Governor and the Deutsche Bank Head of Communications to the Asia
Pacific Region have responded to our story headlined â€˜Prudential
Norms’ on August 27 on central bank independence.
We can but echo the words of Marriner Eccles, a governor on the Federal Reserve board, in his congressional testimony on January 25, 1951 for the benefit of readers and the central bank, extracted from â€˜The Treasury-Fed Accord’ by Robert L. Hetzel and Ralph F. Leach,
As long as the Federal Reserve is required to buy government securities at the will of the market for the purpose of defending a fixed pattern of interest rates established by the Treasury, it must stand ready to create new bank reserves in unlimited amount. This policy makes the entire banking system, through the action of the Federal Reserve System, an engine of inflation. (U.S. Congress 1951, p. 158)
Previously in FOMC minutes he was quoted as saying,
â€¦the whole question of having rationing and price controls is due to the fact that we have this monetary inflation, and this committee is the only agency in existence that can curb and stop the growth of money.. . . [W]e should