Category: Finance

In 2021, the World Bank shut down one of its flagship projects: the Doing Business index, a global ranking system that measured how easy it was to start and run a business in 190 countries.

It followed an independent investigation that found World Bank officials had manipulated the rankings to favor powerful countries, including China and Saudi Arabia. The scandal raised serious concerns about the use of global benchmarks to shape development policy.

Now, the Bank is trying again. In October 2024, it launched its newest flagship report, Business Ready. The 2025 spring meeting of the World Bank and its sister institution, the International Monetary Fund, mark the first time the report will be formally presented to delegates as part of the institutions’ high-level agenda.

Nicknamed B-READY, the report aims to evaluate business environments through more transparent data. This time, the annual assessment has a broader ambition: to go beyond laws and efficiency and also measure social inclusion, environmental sustainability and public service delivery.

As experts on international organizations, law and development, we have given B-READY a closer look. While we appreciate that a global assessment of the economic health of countries through data collection and participation of private stakeholders is a worthwhile endeavor, we worry that the World Bank’s latest effort risks recreating many of the same flaws that plagued its predecessor.

From Doing Business to doing what?

To understand what’s at stake, it’s worth recalling what the Doing Business index measured. From 2003 to 2021, the flagship report was used by governments, investors and World Bank officials alike to assess the business environment of any given country. It ranked countries based on how easy it was to start and run a business in 190 economies.

In prioritizing that as its marker, the index often celebrated reforms that stripped away labor protections, environmental safeguards and corporate taxes in the name of greater “efficiency” of common law versus civil law jurisdictions.

As economist Joseph E. Stiglitz argued in 2021, from its creation, the Doing Business index reflected the values of the so-called Washington Consensus − a development model rooted in deregulation, privatization and market liberalization.

Critics warned for years that the Doing Business index encouraged a global “race to the bottom.” Countries competed to improve their rankings, often by adopting symbolic legal reforms with little real impact.

In some cases, internal data manipulation at the World Bank penalized governments that did not appear sufficiently business-friendly. These structural flaws − and the political pressures behind them − ultimately led to the project’s demise in 2021.

What is B-READY?

B-READY is the World Bank’s attempt to regain credibility after the Doing Business scandal. In recent years, there has been both internal and external pressure to create a successor − and B-READY responds to that demand while aiming to fix the methodological flaws.

In theory, while it retains a focus on the business environment, B-READY shifts away from a narrow deregulatory logic and instead seeks to capture how regulations interact with infrastructure, services and equity considerations.

B-READY, which in the pilot stage covers a mix of 50 countries, does not rank countries with a single score. Rather, it provides more accurate data across 10 topics grouped into three pillars: regulatory framework, public services and operational efficiency. The report also introduces new themes such as digital access, environmental sustainability and gender equity.

Unlike the Doing Business index, B-READY publishes its full methodology and makes its data publicly available.

On the surface, this looks like progress. But a criticism of B-READY is that in practice, the changes offer only a more fragmented ranking system — one that is harder to interpret and still shaped by the same investor driven macroeconomic assumptions.

In our view, the framework continues to reflect a narrow view of what constitutes a healthy legal and economic system, not just for investors but for society as a whole.

Labor flexibility over labor rights

A key concern is how B-READY handles labor standards. The report relies on two main data sources: expert consultations and firm-level surveys.

For assessing labor and social security regulations, the World Bank consults lawyers with expertise in each country. But when it comes to how these laws function in practice, the report relies on surveys that ask businesses whether labor costs, dismissal protections and public services are “burdens.”

This approach captures the employer’s perspective, but leaves out workers’ experiences and the real impact on labor rights. In some cases, the scoring system even rewards weaker protections. For example, countries are encouraged to have a minimum-wage law on the books − but are penalized if the wage is “too high” relative to gross domestic product per capita. This creates pressure to keep wages low in order to appear competitive. And while that might be good news for international companies seeking to reduce their labor costs, it isn’t necessarily good for the local workforce or a country’s economic well-being.

According to the International Trade Union Confederation, this approach risks encouraging symbolic reforms while doing little to protect workers. Georgia, for example, ranks near the top of the B-READY labor assessment, despite not having updated its minimum wage since 1999 and setting it below the subsistence level.

Courts that work − for whom?

Another troubling area, to us as comparative law experts, is how B-READY evaluates legal issues. It measures how quickly commercial courts resolve disputes but ignores judicial independence or respect for the rule of law. As a result, countries such as Hungary and Georgia, which have been widely criticized for democratic backsliding and the erosion of the rule of law, score surprisingly high. Not coincidentally, both governments have already used these scores for propaganda and political gain.

This reflects a deeper problem, we believe. B-READY treats the legal system primarily as a means to attract investment, not as a framework for public accountability. It assumes that making life easier for businesses will automatically benefit everyone. But that assumption risks ignoring the people most affected by these laws and institutions − workers, communities and civil society groups.

Be … better?

B-READY introduces greater transparency and public data − and that, for sure, is a step up from its predecessor. But in our opinion it still reflects a narrow view of what a “good” legal system looks like: one that might deliver efficiency for firms but not necessarily justice or equity for society.

Whether B-Ready becomes a tool for meaningful reform − or just another scoreboard for deregulation − will depend on the World Bank’s willingness to confront its long-standing biases and listen to its critics.

Every year, American universities spend millions of dollars patenting inventions developed on their campuses. Big names such as Stanford and the University of California system lead the pack in patent activity, but hundreds of other universities are also trying to strike gold by monetizing intellectual property. The idea is simple: By investing in patents and selling or licensing them to industry, the university will profit.

But in practice, this strategy rarely pays off.

Indeed, the results of a recent study I conducted using full-cost accounting shows the average American research university is losing millions of dollars on patents annually. One school I examined as a case study lost a staggering $9 million on intellectual property investments in one year.

These findings come at a critical moment. Universities across the U.S. are under serious financial strain and at risk of losing federal funding under the current administration. Speaking as an engineer and innovation expert, I believe universities can no longer afford to be losing money on schemes meant to generate revenue.

How universities got into the patent business

The current system was born out of the 1980 Bayh-Dole Act, which standardized federal policy to encourage university grant recipients to patent their inventions. The goal was to commercialize taxpayer-funded research and to make universities money in the process.

One result was the rapid expansion of technology transfer offices at universities across the country. These offices are designed to support the commercialization of academic research and development.

On the surface, this strategy might seem promising. Years of data from the Association of University Technology Managers, which surveys tech transfer offices, suggested large, growing revenues from licensing intellectual property.

But there’s a major caveat: It costs money for a university to do all this, and the association’s figures don’t take all of those costs into account. They exclude big expenses such as the costs of running technology transfer offices and litigation. When these are included, previous research has shown, just under half of the tech transfer offices pay for themselves.

And even these analyses are incomplete, as they ignore the opportunity costs to faculty participating in the time-consuming patenting process. After all, every hour a professor spends on patenting is an hour not spent writing grant proposals.

This raises a crucial question: Do university investments in patenting, taking into account all the costs, actually deliver a positive return on investment?

To answer this, I developed a formula to determine exactly how much universities spend in patenting, including the costs of faculty time. I then applied that formula to an average R1 research university − about halfway down the list of annual National Science Foundation funding − using real numbers.

The hidden cost of faculty time

For the case study university, I found that every single cost category exceeded the intellectual property-related income. The opportunity cost for writing patents instead of grants was more than 33 times the income realized.

This means that the average U.S. university is literally losing millions of dollars pursuing patents. Research universities could increase research income by simply ignoring intellectual property entirely.

Using this full-cost accounting method is something university administrators would be wise to consider in their decision-making, given the real opportunity costs of faculty time.

Administrators may argue that because faculty are salaried, there’s no additional cost to making them spend time writing patents. But this ignores reality: Faculty are among the university’s most productive assets. They generate income through tuition and research grants. Their time isn’t free − and using it inefficiently can come at a steep cost.

My study looked only at one university that happens to have a very high invention disclosure rate and would, if viewed from afar, seem to be doing really well on intellectual property investment. When all costs are accounted for the university, it becomes apparent that its intellectual property policy is causing the school to hemorrhage money.

The easy-to-follow methodology I set up can be used by any university to determine its intellectual property’s real return on income. Each university will be slightly different, but for the vast majority, the return on investment will be strongly negative.

As the costs of university education become increasingly challenging for many Americans, I think it’s time to take a hard look at university “investments” in technology transfer with a negative return.

As financial systems evolve, so, too, must the data and tools used for oversight. Emerging technologies are transforming supervision through Supervisory Technology (Suptech) solutions, allowing for more effective and efficient oversight with improved data quality. These innovations enable data-driven approaches with unprecedented levels of granularity and quality, deepening our understanding of financial markets. Supervisors using these tools can now track trends, assess risks, and measure financial outcomes across diverse market segments, including by gender. Sharing these insights with the financial industry, government, development partners, and investors enhances product design, oversight, and decision-making, fostering more efficient and equitable financial systems. Although this vision remains aspirational for many, countries like Rwanda are making impressive strides.

Pioneering data-driven financial inclusion policymaking

The National Bank of Rwanda (NBR) is at the forefront of the movement toward data-driven analysis and decision-making to improve oversight, transparency, and impact. In December 2023, CGAP visited Rwanda to learn from their experience, and in June 2024, both institutions co-hosted an international workshop in Kigali focused on strategies to use Supply-Side Gender Disaggregated Data (S-GDD), more effectively and widely. 

Since 2008, the BNR has relied on the FinScope survey, a demand-side survey conducted every four years by Access to Finance Rwanda, NBR, and Rwanda’s Ministry of Finance and Economic Planning to measure financial inclusion. Given the limited frequency of the FinScope survey, the NBR has shifted to monitoring and analyzing financial access and usage using more frequent supply-side granular data collected at the individual level from all regulated financial service providers (FSPs).  

A prominent tool in support of this new approach is the recently launched NBR Financial Inclusion Dashboard, which provides weekly updates on financial inclusion metrics using data from an Electronic Data Warehouse (EDWH). The NBR’s EDWH is a SupTech system that facilitates the collection of granular financial and non-financial data from banks, microfinance institutions, insurance companies, and payment service providers. This SupTech tool has proven to be useful not only for financial inclusion but for other supervisory roles of the NBR as well, such as prudential and consumer protection supervision.

Figure 1: NBR Financial Inclusion Dashboard interface (source: NBR’s website (accessed on March 24))

The Dashboard is valuable for policymakers, financial service providers, development partners, researchers, and any stakeholder interested in financial inclusion in Rwanda. It presents financial inclusion indicators in both data and graphic formats, addressing a longstanding demand in the sector for improved access to such information. 

As shown in Figure 1, users can customize the dashboard view to explore various levels of disaggregation, including gender, age, institution type, account type, or location. Stakeholders can also access high-level financial inclusion indicators, such as the number of adults holding financial accounts, transactional accounts, savings accounts, credit accounts, and insurance policies. Additionally, they can view the different channels through which financial services are accessible, including agents, ATMs, branches, brokers, cards, internet banking, mobile banking, POS, merchants, and bancassurance. 

Building a dashboard like this is no small undertaking. The NBR needed to carry out extensive staff training, development of data analytics, interdepartmental collaboration, and engagement with the industry for data validation and accuracy. Partnerships with institutions like the Alliance for Financial Inclusion (AFI), Cenfri, Access to Finance Rwanda (AFR), as well as CGAP were key in this journey. 

Despite the complexity and time involved, the result has been transformative, enabling BNR to make timely, data-driven decisions moving forward, in support of gender equity in the financial sector. This success highlights the broader potential of granular data, particularly in enhancing gender-based analysis and financial oversight.

Mainstreaming gender-based analysis using granular data

The collection and use of S-GDD remains limited globally, since, unlike Rwanda, most countries either don’t collect granular data or lack integration with ID systems, making gender identification difficult and prone to errors. 

In many cases, data is reported in aggregate rather than granular form, and reporting frameworks rarely require gender disaggregation. Authorities often hesitate to update reporting templates to add gender disaggregation due to uncertainty about the value of gender-based analysis to fulfill their mandates and concerns about the costs and capacity needed to manage the increased volume of data, creating a catch-22.

Given these challenges, CGAP is developing guidance to help financial supervisors collect SGDD and use it in policy and decision-making. The guidance will include recommendations on how to effectively collect and utilize SGDD, with an emphasis on granular data collection, along with compelling use cases for supervisors, policymakers, funders, and financial firms, and actionable indicators to support its implementation.

Financial authorities should champion the use of granular data and prioritize gender-based analysis

The demand for high-quality data and advanced tools to enhance effective supervision has never been more crucial. Alongside ongoing inclusion challenges, like persistent gender gaps, emerging economic and technological risks threaten to widen these gaps and undo hard-earned progress. This calls for innovative solutions. 

Suptech, AI, and cloud computing are transforming the way regulators monitor financial trends and risks by enabling cost-effective granular data collection and utilization. This trend is a great catalyst for mainstreaming granular data that supports gender-based and other types of market-segmented analyses that are key to informing effective strategic decisions by regulators, supervisors, policymakers, and industry players. 

A key use case for granular data in the financial sector is a gender-based analysis using regulatory SGDD to identify gaps and inform strategic decisions to close them. As authorities seek to leverage this type of data, Rwanda’s experience offers valuable insights. The National Bank of Rwanda’s implementation of real-time, gender-disaggregated data through its EDWH and its Financial Inclusion Dashboard serves as a prime example of how such innovations can foster smarter decisions, contributing to more inclusive, equitable, resilient, and sustainable financial systems. By partnering with local and global stakeholders, BNR is setting a benchmark on regulatory Supply-Side Gender Disaggregated Data adoption that benefits not only Rwandan women but the global financial sector. 

CGAP and NBR continue to collaborate, committed to testing the value of additional regulatory SGDD indicators to support financial inclusion analysis and enhance other supervisory and central bank mandates, including research, consumer protection, financial stability, and sustainability.

The Financial Action Task Force (FATF) is consulting on revisions to its travel rule that will affect all payments and value transfers. The proposed changes form part of the G20’s roadmap for enhanced cross-border payments. However, they pose a threat to the speed, cost, and inclusiveness that the international community expects from global remittances. So why the change?

The main motivation for the proposed revisions stems from the major changes in payment innovation over the past years. After more than two decades, the standard adopted in the aftermath of 9/11 – requiring originator and beneficiary data to accompany all payment messages (Recommendation 16) – is simply outdated. Moreover, the G20 has recognized gaps in the international payments system and is pursuing the roadmap project on enhancing cross-border payments envisaging a new design. As part of that project, the FATF is required to ensure enhanced transparency of payment messaging.

Unfortunately, elements of the current proposal to change the travel rule are more likely to negatively impact financial inclusion without improving the integrity of payments. This remains the case despite the FATF Secretariat’s genuine efforts to reconcile the original proposal (made in 2024) with comments received in the first round of public consultations.

More data, more costs

The new proposals envisage more originator and beneficiary data to be collected and verified than is currently the case (see Table 1). That means more costs associated with a transaction and a higher barrier to financial inclusion for individuals, micro-entrepreneurs, and small businesses.

More data collected and shared across borders also comes with more privacy risks. Abuse of such data may feed identity fraud and scams and these in turn may undermine confidence in using formal payments services. It is of value to ask whether the benefits served by such increased transparency outweigh the risks. Will these measures reduce more crime than they might inadvertently cause? How helpful is the additional data, and to whom?

Table 1: Required originator and beneficiary data (transactions over 1,000 USD/EUR)

For cross-border payments, value transfers, and card-based P2P payments above USD/EUR 1,000, the required originator and beneficiary’s data must be verified. For transactions below USD/EUR 1,000 data can be limited to the name of the originator and beneficiary and the originator and beneficiary’s account number or other unique transfer reference number. These do not have to be verified unless there is a suspicion of money laundering or terrorist financing.

Card-based merchant payments are favored over fast payments

Importantly, card-based purchases of goods and services are excluded from the above requirements as long as the card number accompanies the transfer, and the names and locations of the financial institutions concerned are available on request. This exemption, however, does not extend to card-based fast payments (P2P). These payments, whether card-based or using, for example, QR codes and mobile wallets, must meet the Recommendation 16 messaging requirements. Such fast payments have become a standard component in the digital public infrastructure enabling fast growth of digital financial services and financial inclusion.

De minimis exception of limited inclusion value

In principle, the simplified data requirements for low-value payments can be beneficial where countries elect to adopt them. However, the design of the current exception is flawed as it does not support a risk-based approach appropriately. Large banks choose not to simplify data requirements in relation to these transactions and may de-bank smaller institutions that do. The USD/EUR 1,000 limit has furthermore not been adjusted since 2004, effectively lowering the threshold in real value beyond the initial intent (mostly due to inflation over the past two decades). An increasing number of transactions for lower-income people will therefore come within the ambit of Recommendation 16’s standard data requirements in the future. This poses an exclusion risk for those who cannot offer easy verification of their residential address or date of birth. It also creates exclusion risks for smaller businesses that are not officially registered and that lack a unique official identifier or an official and recorded name, required to obtain a LEI. 

Good intentions are not enough

The FATF is committed to preventing undue financial exclusion. It amended its Recommendation 1 in February 2025 to better support financial inclusion and is currently preparing updated financial inclusion guidance. FATF is also required in the G20 roadmap project to support the standardization of payments data in support of cheaper, faster, more transparent, and more accessible cross-border payments.

Asking for richer party data will improve transparency across institutions in the payments chain. However, it will likely also undermine the financial inclusion of millions who are undocumented and living beyond the bureaucratic reach of their governments. To mitigate this risk, the FATF is proposing non-binding guidance on how to address the plight of people who may not be able to provide or verify data such as a town name (for people in rural areas) or date of birth. Non-binding guidance is, however, unlikely to solve the challenges that will arise in practice when data requirements are embedded in ICT systems. Vulnerable people lacking such data may become outliers that are too expensive to serve.

The rule-based data requirements of Recommendation 16 are furthermore likely to limit the simplification of data requirements where money laundering and terrorist financing risks are assessed as lower. These data fields are likely to form the new baseline of simplified identity requirements to prevent users from being excluded from making or receiving payments or value transfers in the future.  Revisions to the Recommendation 16 requirements may therefore limit the risk-based approach and proportionality that FATF supports in relation to financial inclusion. 

What to do?

The financial inclusion community is invited by the FATF to weigh in and contribute constructive solutions by April 18th, 2025, before the final revised travel rule is voted on at the FATF June plenary meeting. FATF recognizes the potential negative impact and is inviting constructive submissions and proposals.

Effective submissions would clearly identify the concern, offer an alternative approach and/or specific wording of the revision, and provide evidence to back the arguments. Submissions can also call for more evidence to assess the potential impact of the proposals and for sufficient time to consider the best implementation design for the new measures.

Nearly every country in the world has a central bank – a public institution that manages a country’s currency and its monetary policy. And these banks have an extraordinary amount of power. By controlling the flow of money and credit in a country, they can affect economic growth, inflation, employment and financial stability.

These are powers that many politicians – including, currently, U.S. President Donald Trump – would seemingly like to control or at least manipulate. That’s because monetary policy can provide governments with economic boosts at key times, such as around elections or during periods of falling popularity.

The problem is that short-lived, politically motivated moves may be detrimental to the long-term economic well-being of a nation. They may, in other words, saddle the economy with problems further down the line.

That is why central banks across the globe tend to receive significant leeway to set interest rates independently and free from the electoral wishes of politicians.

In fact, monetary policymaking that is data-driven and technocratic, rather than politically motivated, has since the early 1990s been seen as the gold standard of governance of national finances. By and large, this arrangement, in which central bankers keep politicians at arm’s length, has achieved its main purpose: Inflation has been relatively low and stable in countries with independent central banks, such as Switzerland or Sweden – certainly until the pandemic and war in Europe began pushing up prices globally.

In comparison, countries such as Lebanon and Egypt, where independence was never extended, or Argentina and Turkey, where it has been curtailed, have experienced more bouts of high inflation.

But despite independence being seen to work, central banks over the past decade have come under increased pressure from politicians. They hope to keep interest rates low and reap voter gratitude for a humming economy and cheap loans.

Trump is one recent example. In his first term as president, he criticized his own choice to head the U.S. Federal Reserve and demanded lower interest rates. After Fed Chair Jerome Powell warned that tariffs are “highly likely” to trigger inflation, Trump lashed out on April 17, 2025, in an online post in which he accused Powell of being “TOO LATE AND WRONG” on interest rate cuts, while suggesting that the central banker’s “termination cannot come fast enough!”

As political economists, we are not surprised to see politicians try to exert influence on central banks. Monetary policy, even with independence, has always been political. For one thing, central banks remain part of the government bureaucracy, and independence granted to them can always be reversed – either by changing laws or backtracking on established practices.

Moreover, the reason politicians may want to interfere in monetary policy is that low interest rates remain a potent, quick method to boost an economy. And while politicians know that there are costs to besieging an independent central bank – financial markets may react negatively or inflation may flare up – short-term control of a powerful policy tool can prove irresistible.

Legislating independence

If monetary policy is such a coveted policy tool, how have central banks held off politicians and stayed independent? And is this independence being eroded?

Broadly, central banks are protected by laws that offer long tenures to their leadership, allow them to focus policy primarily on inflation, and severely limit lending to the rest of the government.

Of course, such legislation cannot anticipate all future contingencies, which may open the door for political interference or for practices that break the law. And sometimes central bankers are unceremoniously fired.

However, laws do keep politicians in line. For example, even in authoritarian countries, laws protecting central banks from political interference have helped reduce inflation and restricted central bank lending to the government.

In our own research, we have detailed the ways that laws have insulated central banks from the rest of the government, but also the recent trend of eroding this legal independence.

Politicizing appointees

Around the world, appointments to central bank leadership are political – elected politicians select candidates based on career credentials, political affiliation and, importantly, their dislike or tolerance of inflation.

But lawmakers in different countries exercise different degrees of political control.

A 2025 study shows that the large majority of central bank leaders – about 70% – are appointed by the head of government alone or with the intervention of other members of the executive branch. This ensures that the preferences of the central bank are closer to the government’s, which can boost the central bank’s legitimacy in democratic countries, but at the risk of permeability to political influence.

Alternatively, appointments can involve the legislative power or even the central bank’s own board. In the U.S., while the president nominates members of the Federal Reserve Board, the Senate can and has rejected unconventional or incompetent candidates.

Moreover, even if appointments are political, many central bankers stay in office long after the people who appointed them have been voted out. By the end of 2023, the most common length of the governors’ appointment is five years, and in 41 countries the legal mandate was six years or longer. Powell is set to stay on as Fed chair until his term expires in 2026. The Fed chair position has traditionally been protected by law, as Powell himself acknowledged in November 2024: “We’re not removable except for cause. We serve very long terms, seemingly endless terms. So we’re protected into law. Congress could change that law, but I don’t think there’s any danger of that.” But Trump’s firing of leaders of other independent federal agencies has set up a legal challenge that could affect the Fed, too.

In the 2000s, several countries shortened the tenure of their central banks’ governors to four or five years. Sometimes, this was part of broader restrictions in central bank independence, as was the case in Iceland in 2001, Ghana in 2002 and Romania in 2004.

The low inflation objective

As of 2023, all but six central banks globally had low inflation as their main goal. Yet many central banks are required by law to try to achieve additional and sometimes conflicting goals, such as financial stability, full employment or support for the government’s policies.

This is the case for 38 central banks that either have the explicit dual mandate of price stability and employment or more complex goals. In Argentina, for example, the central bank’s mandate is to provide “employment and economic development with social equity.”

Conflicting objectives can open central banks to politicization. In the U.S. the Federal Reserve has a dual mandate of stable prices and maximum sustainable employment. These goals are often complementary, and economists have argued that low inflation is a prerequisite for sustainable high levels of employment.

But in times of overlapping high inflation and high unemployment, such as in the late 1970s or when the COVID-19 crisis was winding down in 2022, the Fed’s dual mandate has become active territory for political wrangling.

Since 2000, at least 23 countries have expanded the focus of their central banks beyond just inflation.

Limits on government lending

The first central banks were created to help secure finance for governments fighting wars. But today, limiting lending to governments is at the core of protecting price stability from unsustainable fiscal spending.

History is dotted with the consequences of not doing so. In the 1960s and 1970s, for example, central banks in Latin America printed money to support their governments’ spending goals. But it resulted in massive inflation while not securing growth or political stability.

Today, limits on lending are strongly associated with lower inflation in the developing world. And central banks with high levels of independence can reject a government’s financing requests or dictate the terms of loans.

Yet over the past two decades, almost 40 countries have made their central banks less able to limit central government funding. In the more extreme examples – such as in Belarus, Ecuador or even New Zealand – they have turned the central bank into a potential financier for the government.

Scapegoating central bankers

In recent years, governments have tried to influence central banks by pushing for lower interest rates, making statements criticizing bank policy or calling for meetings with central bank leadership.

At the same time, politicians have blamed the same central bankers for a number of perceived failings: not anticipating economic shocks such as the 2007-09 financial crisis; exceeding their authority with quantitative easing; or creating massive inequality or instability while trying to save the financial sector.

And since mid-2021, major central banks have struggled to keep inflation low, raising questions from populist and antidemocratic politicians about the merits of an arm’s-length relationship.

But chipping away at central bank independence, as Trump appears to be doing with his open criticism of the Fed chair and implicit threats of dismissal, is a historically sure way to high inflation.

This is an updated version of an article that was originally published by The Conversation on June 14, 2024.