New central bank institutional design datasets are used to evaluate worldwide central bank design changes over the past 50 years. The study examines 154 nations’ reform timing, pace, and scale from 1972 to 2017. Central bank design changes based on prior independence and regional convergence. External forces like IMF loans and political events like democratic reforms and nationalistic administrations also affect reform. Reforms also follow rising inflation, suggesting central bank independence evolves endogenously. The research shows heterogeneities in the reform process based on the development level, reform scale and direction, and central bank law features.

Image courtesy of interviewee. December 21, 2023