The mastermind behind the Bank of England's independence now has second thoughts

LONDON - Central bankers like Bank of England Governor Mark Carney should give up some of their "political independence" in order to assure the public they are democratically accountable, according to former Shadow Chancellor Ed Balls.

Balls, who lost his seat as a Labour MP in 2015, wrote in an academic paper that the "more the better" consensus towards central bank independence had "become inadequate."

Proposed measures in the paper include government-appointed bank officials, the creation of a government body helping the bank oversee systemic financial risk, and political oversight of wider financial stability powers.

It was Balls, during his time as chief economic advisor to the Treasury between 1997 and 2004, who in 1997 masterminded a flagship Labour policy to give the Bank of England full independence from political control.

But he believes that discontent with central bankers in England, as well as other countries including the US, mean that a change in policy is now required. "We need a more nuanced approach to central bank independence in this brave new world," he said.

He said that increasing political accountability would help to quell some of the fierce criticism that has been directed at Carney by pro-Brexit MPs including Conservative Jacob Rees-Mogg.

Rees-Mogg called for Carney to be sacked and accused him of becoming "politically involved" during the EU referendum, after the governor warned that leaving the union would involve "significant risks" and potentially a recession.

Balls co-wrote the paper with James Howat and Anna Stansbury for Harvard University, where he holds an academic post - although he is currently focusing on a somewhat different task, as a participant in BBC One's hit dancing show "Strictly Come Dancing."

A former senior Bank of England official said Balls had raised "an important issue."

Andrew Sentance, who used to sit on the Bank's Monetary Policy Committee, told BBC's Today programme: "In the UK, we have a model where the government sets a remit for the Bank of England, and the government could change that remit.

"I think there is a case for looking again at that remit to say whether it's the right one in the circumstances we now face after the financial crisis," he said.