Nepal, Sept. 15 -- A central bank cannot be independent if its governor's tenure depends on the government's approval. Yet that is the risk posed by the amended Nepal Rastra Bank Bill now before the Parliament. The Finance Committee has proposed limiting the governor's term to three years, with the remaining two years subject to a performance-based extension. It has also retained the government's power to issue directives to the central bank. These provisions would give the government precisely the leverage a central bank must be protected from: the ability to make its leadership's job security contingent on political satisfaction.

A governor who fails to perform must be subject to scrutiny and, where necessary, removal. The existing law...