somewhat more flexible. indeed, svensson has characterized many central banks as now operating under " flexible " inflation - targeting regimes, where the flexibility allows them in practice to take account of smoothing output relative to full employment, perhaps making such regimes observationally equivalent to those operating under an explicitly dual mandate. is this true? in addition, central banks can also increase their flexibility in an inflation - targeting regime by setting their objective in relation to an inflation forecast, rather than current inflation performance, or by focusing on core, as opposed to headline, inflation – directions in which inflation - targeting regimes appear to have evolved over time. once we allow for multiple targets and imprecisely defined objectives, the distinction between goal and instrument independence may become blurred. multiple targets that give central banks discretion over the relative weights to be assigned to the objectives – and hence, with respect to short - run tradeoffs, between the targets – in effect give the central bank some important discretion over objectives. similarly, the flexibility afforded by imprecisely defined targets also leaves some discretion about goals with the central bank. a second source of accountability is through the reappointment of committee members. if terms are short and, especially if the chairman and the other voting members can be reappointed for additional terms, more control can be exercised through the reappointment process, and committee members can more easily be held accountable for their policy votes. this is another clear example of the tradeoff between independence ( facilitated by long terms without the possibility of reappointment ) and accountability ( facilitated by short terms with opportunities for reappointment ). a third source of accountability is oversight hearings on monetary policy held by legislative committees. in the united states, we have semiannual congressional monetary policy hearings – formerly known as the humphrey - hawkins testimony. while many focus on the relationship between the central bank and the executive branch, central banks are typically creatures of legislatures who, in turn, control the degree of the bank's independence. the ecb again is unique as a creature of an international treaty and its independence cannot therefore be eroded except by unanimous agreement of the signatories to that treaty. the ecb participates in oversight hearings by the european parliament, but that body has no authority over the bank. this makes the ecb, without question, the central bank with the greatest degree of instrument independence and the least degree of political accountability. transparency and disclosure are also essential to accountability. the legislature, for example,

in the administration put pressure on other members of the board. the board voted 4 - 3 to support the chairman. following the vote the president summoned the chairman to the president's ranch in texas. but the vote stood. the independence of the fed was preserved and indeed used precisely for the purpose it was intended. it is now widely held that raising the discount rate was the correct decision. the minutes of that board meeting make interesting reading. the debate was not just about the importance of asserting the independence of the fed. it was also about the importance of facilitating policy coordination. some members of the board were reluctant to go counter to the policy direction of the administration, and preferred negotiation, given that the administration also deserved a voice in stabilization policy. the coordination of monetary and fiscal policies has not been much of an issue since at least the early 1980s. at that time, fiscal policy shifted focus to longer - run issues – such as balancing the budget, or setting a tax policy that supports economic efficiency and long - term growth. this left stabilization policy virtually exclusively to the federal reserve. history reveals that this division of labor did not eliminate tensions over monetary policy decisions. on many occasions, an administration voiced its displeasure – publicly or privately – with monetary policy actions. these communications were, as you would expect, biased – they were all in response to decisions to raise interest rates and most often occurred when those increases came shortly before an election. the change in views about the role of tax - rate and spending adjustments as part of an activist stabilization policy significantly diminished any need for ongoing coordination between monetary and fiscal policies. the main issues of coordination in recent years have been about how monetary policy should adapt to significant shifts in the direction of fiscal policy, which are motivated in turn by the longer - run considerations. recent examples include the monetary policy responses to the clinton administration's deficit reduction direction and, going forward, to the bush administration's longer - run fiscal program. i have described this kind of coordination as sequential decisionmaking. fiscal policy is slower moving. once fiscal policy is decided upon, the federal reserve takes that policy into account ( and / or takes into account its expectations of future fiscal policies ) when it sets monetary policy. however, if fiscal policy wanted to play a more important role in active stabilization policy, the potential for tension between the administration and the congress and the federal reserve could increase, especially at times when the fiscal and monetary authorities have different views about the cyclical situation or if they have different