The appointment of José Luis Escriva as governor of the Bank of Spain has generated significant political friction between the government of Pedro Sánchez and the opposition of the Popular Party. In my very personal view, these are mere fireworks because the arguments of both sides are flawed from the start. While the Sánchez government firmly supports Escriva and stresses that independence is guaranteed, the PP has expressed its rejection, considering that his appointment would compromise the independence of a key institution such as the Bank of Spain. Many accept without question the idea of the need for an independent central bank, without carefully analyzing the consequences. Moreover, the prior premise is rarely posed: are they really independent?
In essence, the PSOE and the PP share a similar framework of reasoning regarding the need for central bank independence, an idea widely defended both nationally and internationally. The central argument is that this independence allows technical decisions to be made with a long-term vision, thus protecting the economy from inflationary cycles or ineffective policies motivated by political pressures. At the same time, an approach of monetary dominance is advocated that relegates fiscal policy to the background as a key tool of economic policy. However, it is worth asking whether this independence has really contributed to improving citizens’ living conditions.
