Governing the Governors: A Clinical Study of Central Banks

Lars Frisell (), Kasper Roszbach () and Giancarlo Spagnolo
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Lars Frisell: Financial Stability Department, Central Bank of Sweden, Postal: Sveriges Riksbank, SE-103 37 Stockholm, Sweden

No 221, Working Paper Series from Sveriges Riksbank (Central Bank of Sweden)

Abstract: We study the specific corporate governance problems of central banks in their complex role of inflation guardians, bankers’ banks, financial industry regulators/supervisors and, in some cases, competition authorities and deposit insurance agencies. We review the current institutional arrangements of a number of central banks, e.g. formal objectives, ownership, board and governor appointment rules, term limits and compensation, using both existing surveys and newly collected information. Research on central bank governance appears to have focused almost only on their monetary policy task. As shown by the sub-prime loan market turmoil, central banks play a crucial role in financial markets not only in setting monetary policy, but also in ensuring their stability. In this paper, we contrast the current governance practices at central banks with the structures suggested in the corporate governance literature. Our analysis highlights a number of specific issues that appear to have been unsatisfactorily addressed by existing research, such as the incentive structure for governors and board members, the balance between central banks’ multiple objectives and the need for term limits.

Keywords: accountability; bank regulation; board structure; central banks; corporate governance; central bank independence; governor remuneration; term limits (search for similar items in EconPapers)
JEL-codes: E58 G18 G34 G38 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2008-03-01
New Economics Papers: this item is included in nep-cba, nep-cta, nep-his, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Related works:
Working Paper: Governing the Governors: A Clinical Study of Central Banks (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:rbnkwp:0221

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