Autonomy For State Bank Of Pakistan

Mr. Moeen Qureshi, the Former Caretaker Prime Minister of Pakistan raised the State Banks autonomy by amending the State Bank of Pakistan Act 1956 through an Ordinance. The Ordinance of October 6 1993 not only strengthens the independence of the State Bank of Pakistan (SBP) but also restores its legal powers Autonomy here does not mean anarchy Autonomy to bank means the liberty to think and act independently for sound management of liquidity in the economy.

Controversy. There is a controversy in monetary literature and political circles about the role of the central bank in a country One view particularly of the politicians is that the central bank should be a “technical arm” or a “backroom office” of the ministry of finance of the country. The ultimate authority in making economic decisions should rest with the democratic government A representative government, they say is more legal and patriotic to the country.

Those who disagree with this view are of the opinion that a representative government -has many pulls and pressures. A representative political government particularly in developing countries is forced to take hasty, short term economic decisions. These short term actions tend to drive up costs and prices. There is also instability in the internal and external value of the country’s currency. As such the central bank should have an independent thinking. It should be in a position to offer expert counsel with powers to implement it.

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