When central bank independence becomes a condition for International Monetary Fund loans

Independent central banks tend to make anti-inflation policy promises credible and lead to greater economic stability. This is because they are bound by their legal mandates to price stability, while not competing for popular votes. Bernhard Reinsberg, Andreas Kern, and Matthias Rau-Göhring write that an independent monetary authority also insures against the misuse of International Monetary Fund bailout loans. Their research finds that following IMF programs conditioned on central bank independence, the political pressure regarding monetary policy eases.