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By joining the euro, Italy surrendered monetary sovereignty to an external, independent decision-maker, the European Central Bank.In particular, the absence of a domestic currency means Italians cannot choose their own inflation target or devalue their currency vis-a-vis foreign currencies.The canonical case for democratic delegation arises when there is a paramount need for credible commitment to a particular course of action.Accordingly, it is far better to insulate monetary policy from political pressures by delegating it to technocratic, independent central banks that are charged with the singular objective of price stability.There was a good economic argument for the ECB to have lifted its inflation target following the euro crisis to facilitate competitiveness adjustments in Southern Europe.As Paul Tucker, a former deputy governor of the Bank of England, discusses in his masterful recent book, "Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State," the argument for democratic delegation is a subtle one. The distinction between policy goals and how they are implemented needs to be clear.
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