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.
