The erosion of central bank independence worldwide threatens to unleash a round of competitive exchange rate devaluations, the president of Germany’s Bundesbank warned yesterday.

In a speech in Frankfurt, Jens Weidmann said that Stephen King, chief economist at HSBC, was “perhaps right” in forecasting an end to the era of central bank independence. Shinzo Abe, Japan’s new prime minister, has repeatedly threatened to rein in the Bank of Japan if it does not adopt a looser monetary policy.

“It is already possible to observe alarming infringements, for example in Hungary or in Japan, where the new government is massively involving itself in the affairs of the central bank,” said Mr Weidmann, whose institution’s fierce independence from political influence was the model for the European Central Bank when it was founded.