Any answer must acknowledge that the east Asian evidence has contributed
very little support for several propositions linking central bank independence and
inflation: more legal independence results in lower inflation; less turnover at the
governor level leads to lower inflation; and more job security for governors during
political transitions leads to lower inflation. More attention should be paid to the
balance-sheet independence of central banks. Here there is clear progress in
Indonesia, Korea and Malaysia since the crisis in extinguishing central bank credit
extended to banks.