WATERLOO, Canada — March 21, 2014 — Central banks and policy makers should seek global consensus before implementing policies that may have global repercussions, and North African states can take further strides toward central bank independence (CBI). These are among the conclusions and policy recommendations presented in two new reports from the Centre for International Governance Innovation (CIGI).
In A Failure to Cooperate? Raising the Risks and Challenges of Exiting Unconventional Monetary Policies, Domenico Lombardi, Pierre Siklos and Samantha St. Amand urge central banks and policy makers to “develop a common understanding of the consequences of their actions,” and seek a global consensus before implementing policies that may have global repercussions. In proposing a sort of Bretton Woods “revival,” the authors note that “a globalized economy requires shared understandings about what constitutes best practices.”
They write: “The global economy can only become more resilient to shocks when there is greater central bank cooperation. The G20 is a natural venue to promote cooperation and to help the global economy return to stronger economic growth, but other forums may also be appropriate.”
In Central Bank Independence in North Africa, Bessma Momani and Samantha St. Amand present the first policy study on CBI in North Africa since the Arab uprisings, noting that the region was “a laggard among emerging market economies” in improving CBI during the 1990s and early 2000s.
The authors commend the progress toward CBI achieved over the last two decades, while offering the following recommendations:
personnel independence must be improved by placing checks and balances or restrictions on the appointment and dismissal processes of central banks’ boards and governors;
government voting representation on the central bank’s decision-making board should be restricted; and
central banks should improve transparency in order to establish their credibility as independent bodies, which is important for maintaining macroeconomic stability.
ABOUT THE AUTHORS: Domenico Lombardi is director of CIGI’s Global Economy Program, overseeing the research direction of the program and related activities, a member of the Financial Times Forum of Economists and editor of the World Economics Journal.
Bessma Momani is a CIGI Senior Fellow, and associate professor in the Department of Political Science at the University of Waterloo and the Balsillie School of International Affairs.
Pierre Siklos is a CIGI Senior Fellow. At Wilfrid Laurier University, he teaches macroeconomics with an emphasis on the study of inflation, central banks and financial markets. He is the director of the Viessmann European Research Centre.
Samantha St. Amand is a research associate in the Global Economy program at CIGI. Her current research focusses on the political economy of central banking and the international implications of monetary policy.
The Centre for International Governance Innovation (CIGI) is an independent, non-partisan think tank on international governance. Led by experienced practitioners and distinguished academics, CIGI supports research, forms networks, advances policy debate and generates ideas for multilateral governance improvements. Conducting an active agenda of research, events and publications, CIGI’s interdisciplinary work includes collaboration with policy, business and academic communities around the world. CIGI was founded in 2001 by Jim Balsillie, then co-CEO of Research In Motion (BlackBerry), and collaborates with and gratefully acknowledges support from a number of strategic partners, in particular the Government of Canada and the Government of Ontario. For more information, please visit www.cigionline.org.