Courage and Conviction: Chile’s Governor Zahler
Abstract
As President of the Board of Councillors of the Central Bank of Chile, Roberto Zahler had two explicit statutory objectives: price stability and the normal functioning of internal and external payments. He saw price stability not as an end in itself but as a sine qua non for achieving other economic goals, such as stable, sustainable economic growth. Implicitly, he also sought to give substance to the independence of the Central Bank, which had been established de jure or pro forma, but not necessarily de facto, only two years before he became the head of the Bank. While this may appear a tall order, particularly in a developing economy, Dr. Zahler succeeded admirably: he halved the inflation rate and presided over an opening of Chile’s foreign-investment regime. His resignation on principle, when he saw the independence and integrity of the Board of Councillors threatened, left the government of Chile to find a replacement who could maintain the prestige and reputation for independence and integrity that the Bank had attained under his leadership. By sacrificing his person, Zahler saved the program.
Keywords
Exchange Rate Interest Rate Gross Domestic Product Monetary Policy Central BankPreview
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