The optimal approach may depend on the specific economic context, institutional frameworks, and governance structures in place. Some economists advocate for a framework that maintains central bank independence while ensuring that there are mechanisms for communication and coordination between monetary and fiscal policymakers to address economic challenges effectively. Ultimately, the balance Dariusz Prokopowicz between independence and coordination will likely vary depending on the prevailing economic conditions and policy objectives.

An independent central bank can make decisions based on economic indicators rather than political pressures. This helps prevent short-term political considerations from overriding long-term economic stability.

Independence allows for clearer accountability. If monetary policy fails, the central bank is held responsible without the complications of fiscal policy shortcomings.An independent monetary policy can provide more stable and predictable economic conditions. Investors and consumers are likely to respond positively to a central bank that is seen as free from political manipulation.

Some argue that coordinated policies can help ensure long-term economic stability by aligning fiscal measures (such as government spending or tax policies) with monetary policies to create an environment conducive to growth. In times of economic crisis, coordinated policy responses can be more effective. For example, during a recession, fiscal stimulus may need to be supported by accommodative monetary policy to foster recovery.

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Ludwig von Mises identifies the source of the disruption of the world monetary order as the failed policies of governments and their central banks (1934)

Found in: The Theory of Money and Credit

In 1952, the Austrian economist, Ludwig von Mises (1881-1973) argued that the disruption of the world monetary order was attributable to the policies of governments and their central banks:

The people of all countries agree that the present state of monetary affairs is unsatisfactory and that a change is highly desirable… The destruction of the monetary order was the result of deliberate actions on the part of various governments. The government-controlled central banks and, in the United States, the government-controlled Federal Reserve System were the instruments applied in this process of disorganization and demolition. Yet without exception all drafts for an improvement of currency systems assign to the governments unrestricted supremacy in matters of currency and design fantastic images of superprivileged superbanks… The inanity of all these plans is not accidental. It is the logical outcome of the social philosophy of their authors.

Central banks generally operate using a narrow set of guidelines/rules laid out for them by a national (or para national in the case of the EU) government (eg, in the US the Federal Reserve is to manage inflation and unemployment, in the EU the ECB is to focus on inflation) though such narrow foci are not always scrupulously adhered to. Fiscal authorities operate in a much wider field of objectives, a field that includes those of the central banks but also issues of growth, social stability, international relations, and more. At times the best policies from the perspective of the bank will be different from the best policies from the perspective of the fiscal authorities. This makes coordination sometimes difficult and sometimes impossible.

It's of greater importance that the two policies be coordinated because this can ably help easy and better planning and policy implementation because of each is implemented independently, there will always be a clash in them and yet they are supposed to work hand in hand to help achieve economic goals.

However, where there is political influence, it may be a wise decision to implement the two completely independent because once they remain all under government control, they may not achieve the desired goals and objectives

The coordination of both policies is key, especially in times of economic crisis. This can aid in avoiding policy conflicts that may interfere with the policy implementations. Aligned policies promote economic stability without disruptions. A good scenario is during the COVID-19 era when the Fed’s low interest rates made government borrowing cheaper in the US.

Finding the right balance between how the government spends money and how the central bank controls the money supply is key. If they're totally separate, they might work against each other. If they're too connected, people might not trust the central bank. It's best if they talk and agree on the big goals, but the central bank still gets to make its own decisions.

In order to adress the fiscal and monetary challenges for economic development, central bank’s monetary policy as a supportive macropolicy of fiscal and bugetary policy of the government should be coordinated each other.

While central bank independence ensures credible and inflation-targeted monetary policy, some coordination with fiscal policy is necessary during crises or structural reforms to avoid policy conflicts and maximize effectiveness, making a balanced, rule-based coordination model preferable to complete separation.