Joseph Yam Chi-kwong, the chief of the Hong Kong Monetary Author ity, wants more autonomy for the HKMA.
Let's have more, not fewer, safeguards against political interference in the work of the HKMA, he said in a speech last week.
It's the fashion these days. Central bankers around the world are saying that they can do their jobs much better if they are not subverted by politicians looking for easy solutions to problems that will grow only greater if they are addressed with easy solutions.
They have a point. Monetary management is a highly technical and complicated business. The general public does not have a good grasp of all the issues involved and easily falls victim to populist politicians.
But there are two reasons for governments to think twice before letting central bankers get what they want.
The first is that monetary complexity itself. It is not good enough to know that the central bankers themselves understand it all. The general public too must have some working familiarity with how the value of the currency is determined and how interest rates are settled.
This is crucial not only because businessmen need it to have a grounding for their investment plans but also because the stability of a financial system is strengthened when people understand the basics of how it works. No currency can withstand a widespread failure of confidence. The threat of it only grows when confidence is not rooted in some measure of understanding.
