Independence de jure versus de facto – threat of dichotomy. Central bank of Iceland

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JEL classification

• Central Banks and Their Policies
• Monetary Policy
• Monetary Policy, Central Banking, and the Supply of Money and Credit: Other

Keywords

Central bank independence, Central bank of Iceland, de facto, de jure

Abstract

One of the most outstanding characteristics in the recent development of the central banking is the genesis of the central bank independence. Nevertheless this evolution is mainly based on improvement of legislation. This paper examines the possibility of dichotomy between central bank independence de facto and de jure on the case of the Central bank of Iceland. The aim is to evaluate independence de jure and de facto of the chosen central bank. The possibility of disharmony between these types of the independence will be shown on the results. The independence of the chosen central bank was studied during the last twenty years when the independence of this central bank made the biggest progress. The development of both types of independence was quantified due to indexes which are focused on the main aspects of independence. The results of the paper have shown that despite of important legislative changes which were focused on empowering independence de jure there still remain great deficiencies in the independence de facto.