The former Minister of National Planing, Dr Shamsuddeen Usman has urged African
Central Bank governors to maintain a high level of integrity and transparency as a means of ensuring that the much-touted autonomy of the apex banking institution earns the confidence of the people and achieves the desired goal of long-term, non-inflationary growth.
Usman, who stated this in a presentation on Central Bank independence he made at the just-ended meeting of the Association of African Central Bank Governors in Malabo Equatorial Guinea, also noted that there was increasing call for central bankers to show greater accountability in the conduct of monetary and financial regulatory policies.
Usman who is also a former Deputy Governor of the Central Bank of Nigeria (CBN), further pointed out that central banks cannot achieve their goals and control inflation if their integrity is in doubt and people lack confidence in the their policies.
He said further: “As the tenure of the Governors of Central Banks is usually longer than those of their political mentors or tormentors, it is this combination of integrity and public confidence that will establish and sustain the legacy of the Central Bank governors.”
The former Minister also affirmed that there “is considerable evidence of a positive relationship between Central Bank independence and the
achievement of the key objective of monetary policy, which is achieving long-run, non-inflationary growth.”
Central Bank governors to maintain a high level of integrity and transparency as a means of ensuring that the much-touted autonomy of the apex banking institution earns the confidence of the people and achieves the desired goal of long-term, non-inflationary growth.
Usman, who stated this in a presentation on Central Bank independence he made at the just-ended meeting of the Association of African Central Bank Governors in Malabo Equatorial Guinea, also noted that there was increasing call for central bankers to show greater accountability in the conduct of monetary and financial regulatory policies.
Usman who is also a former Deputy Governor of the Central Bank of Nigeria (CBN), further pointed out that central banks cannot achieve their goals and control inflation if their integrity is in doubt and people lack confidence in the their policies.
He said further: “As the tenure of the Governors of Central Banks is usually longer than those of their political mentors or tormentors, it is this combination of integrity and public confidence that will establish and sustain the legacy of the Central Bank governors.”
The former Minister also affirmed that there “is considerable evidence of a positive relationship between Central Bank independence and the
achievement of the key objective of monetary policy, which is achieving long-run, non-inflationary growth.”
He, however, noted that the strength of the correlation is affected by the legal, institutional and political contexts of particular countries.
According to him: “controversy over Central Bank independence has been a long one, as evidenced by the nationalisation of the Bank of England by the Labour government, immediately after the Second World War.”
He observed further that the debate over Central Bank independence usually gathered so much heat in periods of economic and financial crises.[pro_ad_display_adzone id=”70560″]
“Central Bankers therefore, in spite of their increasingly de jure independence, will face challenges to their independence and limits on
what they can do and achieve, especially in periods of economic and financial crises.”
Looking at the Nigerian case study, Usman noted that certain actions taken by the Central Bank of Nigeria, under the immediate past Governor of the last Central Bank of Nigeria, Sanusi Lamido Sanusi, generated considerable amount of controversy, even as the CBN, on its part, “pointed to its relative success in fighting inflation over the period and insisted that all the actions it took were not only in the wider public interest, but also within its limits
of authority.”
He however pointed out that the suspension of Sanusi a few weeks before his term was to expire, was the first time that a Central Bank governor would be removed before the end of his appointed statutory term.
“Without prejudice, however, it is important to point out that, whatever the merits of the case, the removal represents a critical drawback in the process of institutions building. The Central Bank,
until then, had been one institution, the sanctity of which had been left relatively intact, even under military regimes.”
According to him: “controversy over Central Bank independence has been a long one, as evidenced by the nationalisation of the Bank of England by the Labour government, immediately after the Second World War.”
He observed further that the debate over Central Bank independence usually gathered so much heat in periods of economic and financial crises.[pro_ad_display_adzone id=”70560″]
“Central Bankers therefore, in spite of their increasingly de jure independence, will face challenges to their independence and limits on
what they can do and achieve, especially in periods of economic and financial crises.”
Looking at the Nigerian case study, Usman noted that certain actions taken by the Central Bank of Nigeria, under the immediate past Governor of the last Central Bank of Nigeria, Sanusi Lamido Sanusi, generated considerable amount of controversy, even as the CBN, on its part, “pointed to its relative success in fighting inflation over the period and insisted that all the actions it took were not only in the wider public interest, but also within its limits
of authority.”
He however pointed out that the suspension of Sanusi a few weeks before his term was to expire, was the first time that a Central Bank governor would be removed before the end of his appointed statutory term.
“Without prejudice, however, it is important to point out that, whatever the merits of the case, the removal represents a critical drawback in the process of institutions building. The Central Bank,
until then, had been one institution, the sanctity of which had been left relatively intact, even under military regimes.”
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