The central bank must become more independent of government to ensure the stability of the currency, according to a scholar at one of the Government's top think-tanks. Wei Jianing, an economist at the State Council's Development and Research Centre, said the People's Bank of China (PBOC) was subject to interference from branches of the central and local governments, forcing it to make political loans. Mr Wei's views were published in the latest issue of Cai Jing, as part of an intense debate among policy-makers on how to improve supervision of the banks and prevent a repeat of the fraud and malpractice at the Bank of China, which has led to the arrest of Wang Xuebing, its former president. He said countries round the world had learned from bitter experience the need for greater independence for their central banks from the government, not least Japan. China remained behind in the learning curve, with the PBOC far from independent. 'Direct interference by local governments has basically been stopped but indirect interference continues, such as forcing the PBOC to extend loans to local firms that are on the verge of bankruptcy. Interference by the central Government continues, especially in handling non-performing loans and debt for share swaps, forcing the PBOC to make additional loans,' Mr Wei said. 'With its lack of independence, the PBOC is subject to interference from all departments of the Government, making it very hard to achieve stability of the currency and a stable macroeconomic environment and to resist inflationary pressure.' He said the central bank's currency policy committee lacked independence and was not transparent or standardised in its operations. 'After entry into the World Trade Organisation, pressure will increase on China to revalue the [yuan] making it more important to increase the bank's independence,' he said. He proposed removing the PBOC from the control of the State Council and putting it under the National People's Congress. He also proposed upgrading the status of the currency policy committee from advisory to policy-making and reducing the number of government appointees.