Hledat v komentářích
Investiční doporučení
Výsledky společností - ČR
Výsledky společností - Svět
IPO, M&A
Týdenní přehledy
 

Detail - články
The Monetary Cosmopolitans

The Monetary Cosmopolitans

28.03.2014 18:22

Can you imagine a French citizen being elected President of the United States? Or a Japanese prime minister of the United Kingdom? Or a Mexican chancellor of Germany? Probably not. Indeed, even if there were no legal obstacles, it would be difficult to imagine voters in a democracy installing a foreigner in their government’s top job.

But, during the last few years, countries have increasingly turned to foreigners and people with considerable foreign experience to assume what is generally viewed as a country’s second most important position: head of the central bank. What has driven this shift, and should it be welcomed or discouraged?

For example, Stanley Fischer, nominated in January by US President Barack Obama to succeed Janet Yellen as Vice Chair of the Federal Reserve, is an American immigrant from southern Africa who served as Governor of the Bank of Israel from 2005 until last year. And, in July 2013, Mark Carney, a Canadian who had served as central-bank governor in his home country, became the first foreigner to lead the Bank of England in its nearly 320-year history.

Similarly, the widely respected governor of Ireland’s central bank, Patrick Honohan, spent nearly a decade at the World Bank in Washington, DC. One of Honohan’s deputies is a Swede with experience at the Hong Kong Monetary Authority; the other is a Frenchman.

This represents a major departure from the tradition of filling central banks’ top leadership positions with people who have spent most of their careers there – a tradition that, over time, allowed central banks to be taken over by “groupthink.” With the entrenchment of a particular ideology or mode of thinking, monetary policymakers increasingly missed – by choice or inertia – opportunities to change, reinvigorate, and improve the running of these vital institutions.

As central banks’ key role in the recovery from the post-2008 global economic crisis demonstrated, monetary policy must be flexible and innovative. That is where the different perspectives that foreigners bring can help.

The Fed’s experience – shaped by a historically decentralized power structure – highlights the benefits of a policymaking process characterized by diverse views. When the Fed was established a century ago, monetary authority was distributed across 12 regional reserve banks, each of which had considerable autonomy. The fact that the heads of each of the regional Fed banks were called “governor” – the same title given to heads of the long-established European central banks – was indicative of their authority.

But, in the aftermath of the Great Depression of the 1930’s, it became clear that such decentralization had prevented the Fed from formulating and implementing a coherent monetary policy. The heads of the regional banks were “downgraded” from governors to “presidents” – the first and only time in US history when the transition from governor to president was a demotion – and power was centralized in the Board of Governors based in Washington, DC.

Nonetheless, an important legacy of the earlier system has remained: each of the regional banks maintains its own research department, and brings a different approach to the monetary-policy debate. In other words, the Fed’s structure continues to foster a robust and diverse mix of views – something that is severely lacking in many other central banks.

Consider the Bank of Canada. Years ago, an employee at one of the regional Fed banks – who was also my graduate-school classmate – contrasted the responses to his research presentations in the United States and Canada. Whereas staff economists from the Federal Reserve System brought differing perspectives to the monetary-policy debate, their Canadian counterparts seemed to subscribe to a single “Bank of Canada view.”

Two independent reviews of the Bank of England published in the wake of the global financial crisis found a similar lack of intellectual diversity and robust debate. One observed that Bank of England staff members tended to “filter” their advice to make it more palatable to their superiors. The other concluded that the crisis highlighted just how wrong the consensus view had been, and recommended a new approach that considered divergent views. This desire for change may have contributed to Carney’s appointment as the new governor, and his recent decision to bring more outside expertise into the Bank’s leadership.

Avoiding groupthink is essential to developing innovative, effective policies capable of responding to new monetary-policy challenges – and that demands a flexible, dynamic policymaking process.

The good news is that central banks have options for enriching their policy debates, even without the benefit of the Fed’s size, structure, and geographic spread. For starters, they can establish committees of outside experts or commission regular external reviews of policy and the policymaking process. Such reviews typically take place only after a crisis – when it is already too late.

Another solution is to appoint a governor from outside the central bank, preferably one who has enough external experience to avoid being captured by groupthink.

Or, perhaps better yet, they can hire a foreigner.

Richard S. Grossman is a professor of economics at Wesleyan University and a visiting scholar at Harvard University’s Institute for Quantitative Social Science. His most recent book is WRONG: Nine Economic Policy Disasters and What We Can Learn from Them.

Váš názor
Na tomto místě můžete zahájit diskusi. Zatím nebyl zadán žádný názor. Do diskuse mohou přispívat pouze přihlášení uživatelé (Přihlásit). Pokud nemáte účet, na který byste se mohli přihlásit, registrujte se zde.
Aktuální komentáře
21.02.2024
12:40Goldman Sachs: Nvidia je nejdůležitější akcií na světě, výsledky mohou trhem zatřást
11:21Čína vrší opatření, výsledky dnes důležitější než Fed  
10:55Bloomberg: Zaváhání u elektromobilů mění evropský automobilový průmysl
9:57Amazon míří do indexu Dow Jones, vystřídá problémovou firmu Walgreens
9:20HSBC odepsala podíl v čínské bance a zaostala tak výsledky za očekáváním. Akcie podpoří zpětný odkup za až dvě miliardy dolarů
9:05Rozbřesk: Česká „nároková“ ekonomika, aneb každý natahuje ruku
8:54Trhem cloumá Nvidia. Výsledky a výhled naznačí, zda rally na akciích je nadále oprávněná  
6:05Munro: Teslu je velmi těžké porazit, zejména pokud se držíte starého způsobu přemýšlení
20.02.2024
22:00Obchodování na Wall Street se zvrhlo ve one man show Nvidie  
17:21Růst nebo hodnota? Kvalita…
17:17Nedůvěra ve výsledky? Techy dnes táhnou trh dolů  
15:51Německá krize ve výstavbě bytů potrvá déle, varuje Ifo. Ve Švédsku bude ještě horší
15:50Velké americké technologie diktují vývoj celosvětového trhu. Jaká to přináší rizika a kde hledat diverzifikaci
15:47ExxonMobil kvůli byrokratické zátěži v Evropě zvažuje přesun investic do jiného regionu
14:13Summers: Možnost zvýšení sazeb
12:27Evropský automobilový průmysl se mění pod tlakem problémů s výrobou elektromobilů
12:09Bayer osekává dividendu o 95 procent ve snaze umořit dluh a vyřešit právní spory
11:41Průzkum: Třetina Čechů lituje, že své přebytečné peníze neinvestovala
10:56Čínská snaha o podporu velký dojem neudělala, trhy čekají na důležité výsledky  
10:31Goldmani zvyšují svůj odhad S&P 500 do konce roku, rally budou pohánět vyšší zisky

Související komentáře
Nejčtenější zprávy dne
Nejčtenější zprávy týdne
Nejdiskutovanější zprávy týdne
Kalendář událostí
ČasUdálost
20:00USA - Zápis z jednání FOMC