A road map of the report "Issues in the Governance of Central Banks"
This report is aimed at countries wishing to upgrade their arrangements for central bank governance. It surveys the range of relevant practices around the world and seeks to identify the reasons for patterns that can be observed.
This "road map" is intended to help readers with varying concerns quickly access parts of the report that may be of greatest interest to them.
Most readers will find it useful to first read the coloured pages at the beginning of the Report, consisting of the Highlights, which capture the principal themes of the report, and Chapter 1, which surveys Chapters 2 to 7.
The report by topic
The central banking topic closest to today's headlines - the implications of the current financial crisis for central bank governance arrangements - is not yet fit for a comprehensive analysis. In Chapter 1, the report takes the important first step of identifying the governance questions that the crisis has generated and thereafter follows up with a deeper discussion of crisis-related issues, especially in Chapter 2 (impact on functions and conflict among objectives) and Chapter 6 (financial consequences).
For readers concerned with central bank autonomy - a frequent headline item concerning central banks - Chapters 3, 4 and 7 may be of most interest; together they illustrate that central bank autonomy is a means to an end, not an end in itself.
Readers most drawn to matters of central bank communications and transparency may wish to focus on Chapters 4 and 7.
Readers concerned with the division of responsibilities among the central bank, other agencies and government may be most interested in Chapters 2 and 5.
And readers focusing on good management practices and related aspects that make central banks different from commercial enterprises may find the most relevance in Chapters 6, 8 and 9.
The report by chapter
Chapter 1 (coloured pages) surveys Chapters 2 to 7, each in turn. In doing so it identifies the main tendencies visible in reforms of central bank governance in the past three decades, along with the most important questions to be confronted and the choices that are available when considering such reforms. Because context and history matter, not all options are relevant to each central bank, and the discussion therefore emphasises generic considerations.
The objectives of the chapter are to (1) present a high-level, integrated view of key questions to be addressed when designing, reforming or reviewing the governance of a central bank and (2) use enough detail and real experience to bring matters to life in a non-prescriptive manner.
Chapter 2 examines the range of functions historically and currently undertaken by central banks and the specification of objectives for their main policy functions. Determining tasks and setting objectives are key aspects of governance.
Chapter 3 considers the legal frameworks used by countries to delegate state powers to the central bank and systems of safeguards, or checks and balances, that have been devised to make that delegation both meaningful in practice and acceptable for open societies.
Chapter 4 looks at the design of decision-making arrangements and is motivated by the fact that an increase in the delegation of power to the central bank has often been accompanied by a move to group decision-making.
Chapter 5 considers various ways of constructing working relationships between the central bank, the government and the legislature so that the central bank's delegated authority is not diverted in the pursuit of effective coordination.
Chapter 6 surveys resource issues of central banks, including those arising from the fact that profit-making is not their primary objective.
Chapter 7 examines how central banks are made accountable for the manner in which they exercise their powers, including via the transparency of their decision-making. This chapter is thus the major counterpart to the discussions in Chapters 2 to 6 regarding the powers and resources granted to central banks.
Chapter 8 deals with the management of risk.
Chapter 9 discusses the design of management structures and staffing arrangements.