Statutory Central Bank Independence in Taiwan

This paper critically reviews the Central Bank of the Republic of China (Taiwan)Act and finds that the level of legal independence of the Central Bank is relatively lowcompared to the rest of the world. However, Taiwan has been able to combine lowinflation with a legally dependent Central Bank. In this paper an attempt is made toprovide the possible explanations to this low inflation/low independence puzzle in Taiwanand argue that Taiwan should still follow the trend of creating a more independent Central Bank.