Keynes, the Labour Party and Central Bank Independence
This chapter classifies the meanings of Central Bank Independence (CBI) and recalls the diverse institutional organisation of policy existing in the USA and UK. It describes how banks of issue fully acquired the functions of central banks and demanded independence after WWI. The chapter points out how the Labour Party discussed this topic. It assesses how Keynes intervened in this dispute. The issue of CBI has been at the centre of literature in recent years. The topic was raised after WWI, when financial markets grew in size and complexity as a result of the debt supplied to finance the war. Central banks can enjoy different forms of independence and possess them to varying degrees. A forceful demand for CBI emerged after WWI when the tasks of monetary authorities grew in complexity. After WWI, the operations concerning the funding of the government sector and the consolidation of the British position in the international financial system underwent new variations.