I

t is apparently only in Indonesia where the central bank ' Bank Indonesia (BI) ' has a unique position in the real economy with regard to supply. The intent is to limit supply shocks in an effort to check inflation. This mandate is assigned to the so-called regional inflation control teams (TPID) which was established in 2005.

The objective of the TPID is to achieve low and stable inflation. BI, the Office of the Coordinating Economic Minister and the Home Ministry are the members.

The TPID's duties are divided into two, namely those performed by each member alone and the duties performed in the implementation of collective tasks. In the TPID BI is in charge of demand and together with the government BI is collectively responsible for supply.

Together with the government, BI plays a role in the stabilization of the exchange rate policy and controls inflation expectations related to external factors, a collective task. The government then plays a role in the field of administrated price inflation and volatile food inflation, its own responsibility.

All of these lead to the TPID's control framework for the consumer price index.

The idea of the TPID itself is very promising. However, the TPID is the government's responsibility and should not involve BI. I argue that BI's involvement can have two negative impacts.

The fiirst is a lack of focus and inefficient use of national resources. Inflation that arises from supply problems is caused by poor distribution infrastructure and factors in the production process. These issues are entirely the government's responsibility.

India also has inadequate distribution infrastructure. However, the central bank of India (RBI) remains focused on its mandate. The RBI plans to cut consumer inflation to 6 percent in 2016 from average inflation of 10.92 percent in 2013.

The RBI's governor is committed to this goal, even if the RBI has yet to receive explicit political backing.

It is reported that the RBI plans to hit it harder if it does not get support from the government and if the goal is not met and supply-side measures are not taken, interest rates may be increased. The RBI's courage is a good role model for BI. Another example is the Philippines, which is an archipelago nation like Indonesia and has identical supply-distribution problems.

However, its central bank remains focused. There is an outstanding quotation from the Banko Sentral NG Pilipinas that BI should take into consideration in regard to returning to carrying out its original mandate: 'There are limits to the effectiveness of monetary policy and deviations from the inflation target may sometimes occur because of factors beyond the control of the central bank, such as volatility in the prices of agricultural products, natural calamities or events, volatility in the prices of oil products and significant government policy changes that directly affect prices such as changes in the tax structure, incentives and subsidies.'

Furthermore, to carry out its duties in the TPID, BI certainly requires a lot of manpower. The total number of employees of BI has remained relatively unchanged when comparing the present the era before the bank supervision unit was moved to Indonesia's Financial Services Authority (OJK). It is fair to argue that these national resources could be better allocated to other institutions in accordance with the constitutional tasks.

Second, membership of the TPID contravenes the principles of accountability and independence. Both have a negative correlation with inflation based on the review by the International Monetary Fund (IMF) of the legal reforms of 14 Latin American countries during the 1999-2001 period.

With the melting pot involving BI and the government, a closer interrelationship has certainly arisen between them.

Being accountable is understood as being held responsible for one's decisions and being required to justify and explain them. Accountability is crucial for central banks. The European Central Bank (ECB) defines accountability as the legal and political obligation of an independent central bank to justify and explain its decisions to its citizens.

Accountability is a fundamental precondition and core element of democratic legitimacy. BI has received a mandate to maintain price stability as stated in its vision. Therefore, BI is accountable for any outcome of decisions taken in the TPID while the government also plays a crucial role or perhaps has a dominant influence on BI's decisions.

In the publication issued by the Bank for International Settlements (BIS) it is mentioned that there are three characteristics of accountability. One of the three is the risk of negative repercussions, if performance is unsatisfactory. Not all of the public or investors fully comprehend the mechanism of the TPID. Hence, once the TPID fails the public may question BI's credibility, although the failure may be jointly caused by the government as well.

An antagonistic relationship between governments and central banks is routine. It would be very questionable if the relationship was too harmonious.

For instance Argentina's President Cristian Fernández de Kirchner dismissed the president of that nation's central bank, Martin Redrado in 2010, who had been appointed by her husband in 2004 and reappointed by herself in 2007, because Redrado insisted vehemently on rejecting her plan to tap US$6.59 billion of the country's reserves to pay down foreign debt so as to eventually lower inflation.

In the experience of the ECB, which should be studied by others, economic policy makers should have a strong interest in sharing information and maintaining a close dialogue with the ECB. With regard to a stronger dialogue ' in my view the TPID, for instance ' the ECB stresses that one may suspect that behind such calls lurks the desire for some political oversight. In the ECB's view, that would be tantamount to undermining the ECB's independence.

Another good experience is in the US case. Monetary policy is never discussed at meetings between the Fed chairman and the secretary of the Treasury. Now in contrast, imagine a central bank and a government that regularly meet and share their joys and sorrows, as in the TPID meetings.

Membership of the TPID should not be essential for BI. The main task of the central bank is to manage inflation expectations in a consistent and transparent manner. When it comes to commodities, there are speculators who take advantages of the mismatch in prices. If a party ' for instance chili farmers ' is disadvantaged because of a TPID policy, it would be unseemly for BI to get involved in the dispute. I also challenge the governor to provide empirical prove that the decline in inflation as stated above is due to the TPID.

Based on the arguments that I have underpinned, BI needs to disengage from the TPID.