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When I chose the topic for my dissertation in the early 2010s, central bank independence felt almost outdated. Hadn’t everything already been researched and said?

My reasoning was: yes, it is beyond doubt that central banks can only safeguard a currency’s stability if they are free from short-term political influence.

«The independence of central banks is never carved in stone.»

At the same time, I knew this independence is never carved in stone. It can be lost quickly once politics or the public demand it. Central banks remain only as independent as society allows them to be. 

Highly Expansionary Monetary Policies

Since the financial crisis, central banks have used their autonomy to pursue highly expansionary monetary policies. They could do what politicians only dream of: short-term stimulus programs, large-scale government bond purchases, and currency interventions. Yet that was never the original idea of independence. Central banks were created to act with the freedom to take painful short-term measures that are essential for long-term stability.

This is precisely the kind of independence now needed in the U.S.: keeping rates high, even when it hurts and political pressure mounts. Yet the Federal Reserve has already caved, cutting rates last Wednesday. Instead, the Federal Reserve already gave way, cutting rates last Wednesday. 

Criticism Strikes a Nerve

One easy entry point for criticism is the Fed’s spending. Multi-billion-dollar renovations of its facilities have handed the Trump administration an easy opportunity to undermine the institution’s credibility. 

That criticism strikes a nerve: institutions with limited accountability almost inevitably treat resources too generously. 

«Even if central banks are simultaneously moving sums in the billions or trillions, construction projects still involve public funds.»

In the absence of budgetary pressure, decision-makers tend to opt for the more comfortable, safer, and more expensive solution. Even if central banks are simultaneously moving sums in the billions or trillions, construction projects still involve public funds.

A Similar Case in Germany 

Germany recently faced similar issues when the Federal Audit Office criticized the Bundesbank over a renovation project whose costs had ballooned and schedule slipped, forcing cutbacks. The cost per office workstation topped one million euros. The verdict: «The Bundesbank set a cost framework far beyond usual standards.»

With little decision-making autonomy left, criticism of the Bundesbank has limited impact. 

Switzerland: Painful Decisions Will be Unavoidable

Switzerland is different: the SNB’s independence will be crucial in the years ahead. Its previous strategy of massive foreign-exchange interventions to support the economy cannot be continued indefinitely without importing instability from abroad.

Given mounting debt and the shrinking independence of large currency areas, the SNB will no longer be able to fight franc appreciation on the same scale. Painful decisions will be unavoidable. 

An External Review From the Swiss Federal Audit Office

That makes it all the more important not to hand critics unnecessary ammunition—especially on the spending side. The SNB’s operating expenses have risen significantly, according to its annual report. Unlike Germany, however, Switzerland has no audit office to provide detailed oversight of budgets or construction projects.

«For all central banks, the rule applies: they must embody the virtue of frugality themselves.»

The SNB could boost transparency—for example, by inviting an external review from the Swiss Federal Audit Office. Far from undermining its independence, such a step would reinforce it. It would demonstrate prudent stewardship of resources while preserving the freedom to take unpopular but necessary monetary policy decisions. 

For all central banks, the rule applies: they must embody the virtue of frugality themselves, not merely demand it from others. Nothing erodes trust more swiftly and more lastingly than hypocrisy. 

Adriel Jost is an independent economist, consultant, and public speaker. He is also a Fellow at the Institute for Swiss Economic Policy at the University of Lucerne (IWP), a lecturer at the University of St. Gallen (HSG), and president of the think tank Liberethica. Previously, he served as an adviser at the Swiss National Bank (SNB) and as chief economist at Wellershoff & Partners. 

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