Thesis (Selection of subject)Thesis (Selection of subject)(version: 356)
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Central bank’s Independence, Transparency and Accountability: Comparison between the National Bank of Georgia and the European Central Bank
Thesis title in Czech:
Thesis title in English: Central bank’s Independence, Transparency and Accountability:
Comparison between the National Bank of Georgia and the European Central Bank
Key words: Měnová politika, nezávislost, transparence a zodpovědnost centrální banky
English key words: Monetary policy, Central bank Independence, Transparency, Accountability
Academic year of topic announcement: 2013/2014
Type of assignment: diploma thesis
Thesis language: angličtina
Department: Institute of Economic Studies (23-IES)
Supervisor: doc. Mgr. Tomáš Holub, Ph.D.
Author: hidden - assigned by the advisor
Date of registration: 17.06.2014
Date of assignment: 18.07.2014
Date and time of defence: 22.06.2015 00:00
Venue of defence: IES
Date of electronic submission:12.05.2015
Date of proceeded defence: 22.06.2015
Reviewers: Mgr. Adrian Babin, M.A.
URKUND check:
The independence of central banks is long recognized as an important precondition for successful achievement of price stability. Another two crucial elements of the modern institutional design of monetary policy are transparency and accountability. Independence gives central banks the opportunity to avoid the political pressures, while transparency is a way of holding them accountable for their decisions

The independence and transparency of central banks is measured by many authors, for example: Dincer and Eichengreen (2009) computed transparency indices for more than 100 cenrtal banks; Dvorsky (2000) estimated the independence of central banks in transition countries, Pisha (2011) built a new model for measuring the independence of cenrtal banks in European Union countries, etc. But the main difference from those papers and my thesis is that I will do it as a comparison between the National Bank of Georgia (NBG) and European Central Bank (ECB).

Measuring the independence and transparancy of the NBG and the comparison with the ECB is first of all important for Georgia as ab emerging country that aims to join EU. This comparison will reveal the weaknesses of the NBG that can be improved based on the ECB practice. In addition, an independent and transparent NBG is important for the rest of the world as one of guarantors of economic stability in the country. Independent national bank also serves as the guarantor for investors that the price and inflation levels won’t vary dramatically.

The thesis will address the following hypothesis:
1. Hypothesis #1: Independence of National Bank of Georgia (NBG) has increased over time. But there are still some weaknesses related to independence of European Central Bank (ECB).
2. Hypothesis #2: As independence and transparency go together, transparency of National Bank of Georgia (NBG) has also increased over time. But there are still some weaknesses related to transparency of European Central Bank (ECB).
3. Hypothesis #3: As a result of increasing independence and transparency the accountability of National Bank of Georgia (NBG) has also increased. But there are still some weaknesses related to accountability of European Central Bank (ECB).

For quantifying the level of independence of NBG and ECB, the thesis will use „de jure“ central bank independence indices. Also it will use the Cukierman and the Grilli-Masciandaro-Tabellini (GMT) indices for this purpose. It will compare the results for both central benks.
In case of transaparency, the estimation will be based on the indices from Dincer and Eichengreen (2009). The results will also be compared between NBG and ECB.

After measuring NBG’s and ECB’s independence and transparency, the thesis can conclude about their accountability, because central bank‘s accuntability depends on the quality of its independence and transparency.

In order to see the tendency of independence and transparency positive or negative movements, the thesis will analyse their evolution over the 15 years starting in 1999 and ending in 2013.
In the end, after identifying the aspects of independence, transparency and accountability that are lacking in NBG, the author will suggest improvements based on ECB policy.
• Crowe C., Meade E. E., Central Bank Independence and Transparency: Evoluation and Effectiveness, IMF working paper, 2007;
• Cukierman A., Webb S. B., Neyapti B., Measuring the Independence of Central Banks and Its Effect on Policy Outcomes,The world bank economic review, Vol. 6, No. 3: 353-398;
• Dincer N., Eichengreen B., Central Bank Transparency: causes, consequences and updates, National Bureau of economic research, working paper 14791, 2009;
• Dincer N., Eichengreen B., Central Bank Transparency and Independence: Updates and New Measures, BOK Working Paper No.2013-21, 2013;
• Dvorsky S., Measuring Central Bank Independence in Selected Transition Countries and the Disinflation process, BOFIT disscusion papers No. 13, 2000;
• Eiffinger S. C. W., Hoeberichts M. M., Schaling E., A Theory of Central Bank Accountability, 1998;
• European Central Bank (ECB): Publications;
• European Central Bank (ECB): Organisation;
• National Bank of Georgia (NBG): Research and Publications;
• National Bank of Georgia (NBG): Law of NBG;
• Pisha A., disscusion: Garganas E., Eurozone indices: a new model for measuring central bank independence, Special conference paper, Bank of Greece, February 2011.
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