The rise of the vast administrative apparatus of state has resulted in numerous unelected agencies wielding power over the lives of ordinary citizens. There is no pretence that these organisations are independent from the executive branch: they exist to carry out the will of elected representatives, albeit with an eye to the “public interest”.
Central banks are a different story altogether. They are considered ‘independent from politics’. Although not quite as independent as national constitutional courts, they sit apart from ordinary government bureaucracies. The Treasurer, no matter how much he may disagree, is bound either by law or practice not to interfere with the monetary policy decisions of the bank.
This has insulated them from accountability. Parliament does not control the Reserve Bank’s budget, as it does for the independent court system. Full disclosures of monetary policy dealings domestically and internationally are not accessible. The RBA’s exemption from Freedom of Information laws prevents the public from finding out the extent of its relationships with external actors. Like the Fed, no parliamentary committee truly oversees every aspect of its decision-making, meaning it is probably more secretive than the Australian Security Intelligence Service.
Comprehensive audits can reveal useful information about how a central bank is employing its discretionary powers. These audits have been said to impinge on independence, but many fail to consider the protections can be put in place to minimise this risk. Not all documents discovered during an audit need to be made public. Some can be viewed privately by the inspector-general in charge of accountability. Appropriate safeguards, such as time lags between the time of a monetary policy decision and an audit of the decision, can be put in place.
Politicians already have many ways to interfere in monetary policy – using the bully pulpit of parliamentary committees is one of them – and it is unlikely that expanding the scope of audits would significantly affect central bank independence.