may be detrimental to the economy. these outcomes would be inconsistent with the long - term goals set by congress. delegating the decision - making to an independent central bank that can help focus on long - term policy goals is a way of limiting the temptation for short - term gains at the expense of the future. bis central bankers ’ speeches the second important reason to give monetary policy decision - making to an independent central bank is to separate the authority of those in government responsible for making the decisions to spend and tax from those responsible for printing the money. this lessens the temptation for the fiscal authority to use the printing press to fund its public spending, thereby substituting a hidden tax of inflation in the future for taxes or spending cuts. history is replete with examples of what happens when central banks are not independent or become agents for a nation ’ s fiscal policy. just think of the hyperinflation in germany between the world wars of the last century, or in italy before the euro, or in the numerous financial crises and high inflation rates in latin american in more recent years, to name just a few. the consequences – higher inflation, currency crises, and economic instability – are not good. this is why so many countries have structured their central banks with a great deal of independence from political interference. despite the strong arguments for political independence, there continue to be proposals that would make monetary policy subject to more political interference. in recent years, this effort has manifested itself in the movement in congress to pass an “ audit the fed ” bill. since 1978, congress has specifically exempted monetary policy decisions from such “ audits ” by the government accountability office, or gao, with good reason. the bill is not really about an audit in the usual accounting or financial sense of the term, since the fed ’ s financial statements and indeed its operations in supervision and payment services are already subject to extensive outside audits by the gao, the board of governors ’ office of the inspector general, and an outside public accounting firm. rather, this proposal to strike that exemption for monetary policy is an attempt to reduce the independence of the central bank through the threat of a political action in real time. for example, under the provisions of the bill, the gao could be called on to investigate a monetary policy decision whenever any member of congress opposes a decision to change interest rates. this possibility would change the dynamics of the fomc ’ s internal discussions and undermine the fed ’ s credibility and its ability to conduct monetary

at the same time the netherlands has tightened fiscal policy considerably, including significant expenditure cuts. this also reflects a procyclical approach, but the dutch want to keep the budget deficit below three per cent in compliance with the stability and growth pact. if only all euro area member states were as determined as the netherlands. this example shows how succumbing to relaxation of fiscal policy in good times can lead to highly unstable development. the consequences of activist fiscal policy may be entirely different from what was expected. in denmark, changing governments have been well aware of the risk that economic policy could go off course - precisely because of the potential vulnerability of the fixed - exchange - rate policy. therefore, in denmark more than in most other countries, the watchword has been “ stability - oriented economic policy ”. and everyone has accepted that monetary policy in itself could not contribute to domestic stabilisation, as it was earmarked for stabilisation of the exchange rate. as mentioned, this increases the responsibility imposed on fiscal policy. fiscal - policy “ activism ” has been avoided, and a largely neutral fiscal policy has been pursued. the shocks of frequent fiscal - policy changes have thus been avoided. the internationalisation of the financial sector and the eu ’ s single market for financial services have been key issues for many years. many rules and regulations have been made to facilitate this development. the primary purpose has been to create a level playing field. another purpose has been to facilitate cross - border activities. all this has contributed to making the financial markets more open and competitive and giving customers the advantages of a large market. in reality, large financial corporations have a national affiliation even if they have foreign ownership. they are mainly in contact with national authorities such as a country ’ s financial supervisory authority, central bank, deposit guarantee scheme and ministries. however, developments in the nordic banking market in recent years indicate that we may be headed for integration of a magnitude that will significantly change the national relations. this will make it more difficult for the authorities to observe the traditional national borders. one very specific field where this will be evident in practice is statistics, as it applies the concepts “ domestic ” and “ foreign ”. if a financial group operating in several countries brings together certain activities in one country, it may cause strange shifts in the statistical information, which by no means indicate underlying changes in the transactions conducted. the statistics may no longer present an accurate picture. such restructuring within cross - border groups will require a new approach from the