Adam Posen, then a member of the Bank of England’s Monetary Policy Committee, was characterized as arguing in a speech that:
Central banks’ purchases of government debt … far from undermining their independence … should enhance their credibility…. Mr. Posen said, … “What matters for our independence is our ability to say no and to mean it, and to be responsible about when we choose to say yes.”
a. Why might purchasing government debt be seen as undermining a central bank’s independence?
b. Why might a central bank sometimes want to say “no” to suggestions that it purchase government debt? Why might it sometimes want to say “yes”?