Central Bank Independence (You Don't Know What You've Got 'til It's Gone): The Doug Purvis Memorial Lecture.

This lecture, delivered at the 59th Annual Meetings of the Canadian Economics Association in May 2025, examines the evolution, benefits, and contemporary challenges of central bank independence (CBI), with a focus on the Bank of Canada. It traces the Bank’s development since 1935, highlighting key episodes such as the Coyne Affair and the adoption of inflation targeting in 1991, and compares its independence to that of peer institutions. The lecture discusses how CBI has contributed to Canada’s macroeconomic stability but notes recent challenges arising from the Bank’s COVID-19 response, post-pandemic inflation, and rising government debt. To strengthen the Bank of Canada’s independence, five reforms are proposed: codifying price stability as the Bank’s primary legislative mandate; formalizing governance for quantitative easing and tightening; enhancing forward guidance communications; clarifying fiscal–monetary coordination protocols; and instituting regular, independent reviews of the Bank’s performance and policy framework. These measures aim to preserve credibility, transparency, and accountability amid evolving economic and political pressures.