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The principle that a central bank, charged with controlling inflation, should be independent from the government is unassailable. It may also be true that it's easier for the central bank to guard its independence from political pressure when it mainly holds government securities.

Political risk is hard to manage because so much comes down to the personal choices of policymakers, whether prime ministers or heads of central banks.

Central bankers have had enormous responsibilities thrust on them to compensate, essentially, for the failings of the political system. And my worry is we don't have sufficient tools to do that, but we're not willing to say it.

The financial system has to be regulated, we have to end with the tax havens, and it's necessary that the central banks in the world should control a little bit the banks' financing because they cannot bypass a certain range of leverage.

The one thing people don't appreciate, I think, is that central banking is not a new development. It's been around for a very long time.

However, in spite of the general perception that monetary policy should be conducted so as to avert deflation, a central bank cannot lower interest rates below the zero lower bound.

There is always the potential for a central bank to engage in discretionary monetary policy and to break the one-to-one link between changes in foreign reserves and changes in the money supply.

I'm just opposed to a pure inflation-only mandate in which the only thing a central bank cares about is inflation and not employment.

The Central Bank should have a permanent window for discounting high quality securities where banks could go and discount these. It gives peace of mind to the banks. In the absence of this facility, what banks tend to do is to keep a liquidity cushion for emergency requirements. This is a very expensive way of managing liquidity.