by Atsadang Yommanak
Populism + Central Bank Intervention = Disaster
When political powers decide to adopt populist policies, what often follows is an attempt to intervene in the central bank, ultimately leading to the nation’s economic downfall.
Populist policies involving cash giveaways by the ruling party are typically more than just economic measures; they are political strategies aimed at building popularity and securing voter loyalty. These measures are frequently funded through public tax revenue, the national budget, or even government borrowing, all in the name of short-term gains that attract public interest.
Once political powers decide to enact populist policies, the next inevitable step is often interference in the central bank. Political intervention in central bank operations is detrimental to economic stability. When the central bank is stripped of its independence in monetary policy, the country loses a critical tool for long-term economic planning.
Economic policies then risk becoming overly focused on short-term benefits, ignoring long-term objectives like infrastructure development, investment in innovation, and preparation for future challenges, such as technological advancement or environmental concerns. This shift towards short-termism diminishes the nation’s ability to compete on a global stage.
Intervention in the central bank not only erodes trust in the financial and economic systems but also undermines the nation’s long-term economic development. Without an independent central bank, economic planning becomes driven by immediate political goals rather than sound economic principles, leading the nation toward a future of instability and diminished growth potential.
