Technocrats versus politicians

In a democracy, monetary policy cannot be entirely left to technocrats any more than war can be left to generals

Former Reserve Bank of India deputy governor Viral Acharya thinks financial stability in India is compromised by governments that are keen to use the banking system to boost growth.

Well, in a fundamental sense, financial stability is always compromised. It is just one of the objectives the central bank pursues. The other objectives may include growth, inflation, the exchange rate and financial inclusion. In the short-run, financial stability is traded off against other objectives.

In principle, the central bank could privilege financial stability a little more by, say, setting a higher level of capital adequacy for banks. The central bank