INSTITUTIONAL FRAMEWORK LINKING CENTRAL BANK INDEPENDENCE TO PRICE STABILITY

Viktoriia Rudevska, Kateryna Ukhanova, Herman Rosstalnyi

Abstract


As a result of developments in academic thought and modern economic theory, central bank independence is widely regarded as one of the key institutional prerequisites for ensuring price stability. At the same time, the mechanisms through which central bank independence influences inflationary processes and the outcomes of monetary policy remain insufficiently studied and systematized. The purpose of this article is to synthesize current academic approaches and develop a comprehensive conceptual model that explains the relationship between central bank independence and price stability. The method of analysis and synthesis was applied to summarize scientific approaches to identifying the key institutional elements of the regulator’s autonomy and the channels through which it influences price stability. Using a systemic approach, central bank independence is examined as a holistic system of interrelated institutional and monetary elements functioning within a single mechanism for ensuring price stability. Using the method of conceptual modeling, the author has constructed an institutional mechanism that combines the elements of establishing central bank independence and the main channels through which it influences price stability. The framework proposed by the authors summarizes the main institutional and monetary transmission channels through which central bank independence contributes to price stability. The practical significance of these findings lies in their potential application to improving central bank governance, assessing the level of their institutional independence, and conducting further research.

Keywords: CBI, central bank, central bank independence, price stability, monetary policy, market confidence, time inconsistency, money supply, inflation


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DOI: https://doi.org/10.26886/2414-634X.3(72)2026.4

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