Seminar on central bank governance begins in PoS

FAILURE of corporate governance at large corporations such as Enron, WorldCom and Parmalat has been blamed on Boards of Directors not putting in place adequate systems of checks and balances to prevent managerial excesses. Yesterday, the Bank of England and the Central Bank of TT hosted a Corporate Governance Seminar for Central Banks to discuss the basics of good governance and the appropriate model of a Central Bank. Central bank governors from Jamaica, Barbados, Bermuda, Haiti and Suriname took part in the three-day conference. Ewart Williams, Governor of TT’s Central Bank, focused on three main objectives of central banks: macro-economic stability, orderly economic growth and a stable regulatory system.

“Good governance for central banks requires that institutional mechanisms are in place, to achieve these objectives in an efficient manner,” said Williams. Central bank governance is defined by a number of key pillars, which form the basis of the legal framework governing the central bank. These pillars, said Williams, were independence (autonomy), accountability and transparency. Williams said many governments tried to ensure good central bank governance by insisting that independence, accountability and transparency were enshrined in the central bank’s governing structure. However, Williams pointed out that the integrity of persons performing the various functions is particularly important for good governance.

Williams said there was no doubt that some level of central bank autonomy is required for the efficient conduct of monetary policy. “Elected politicians face monetary temptations which conflict with an inflation-adverse monetary policy. Ironically, it is taboo in developed countries, that a ministry of finance official be a member of the central bank Board and in several jurisdictions, senior central bank management participate in government committees,” said Williams. Bank of England adviser, Sue Milton, believed good governance also included maximising the private sector’s shareholder value and maximising the public’s interest. Milton said better relationships with the public and private sector would yield the right results.