The broader the mandate of a central bank, the harder it is to keep accountable, Reserve Bank governor Lesetja Kganyago told a press conference in Washington.And the trend is towards more independence for central banks, he said.
The ANC has promised voters flexible monetary policy (that's already in place), the DA is warning against populism in the central bank's mandate, and the EFF is preemptively taking credit for the nationalisation of the Reserve Bank.The trend is towards more independent central banks, Reserve Bank governor Lesetja Kganyago says – and keeping an independent central bank accountable is easier when it has a narrow mandate.Kganyago made the remarks at a press conference in Washington after a meeting of the International Monetary and Financial Committee (IMFC) – after creating the space for himself to make the point.
Asked whether she was alarmed by recent political pressure on central banks, from the likes of US President Donald Trump, International Monetary Fund (IMF) head Christine Lagarde took a diplomatic approach, the IMF's transcript of the Friday press conference shows. Independence had served central banks well, she said, but "here are different ways around the world to organise" a central bank, and different central banks have different mandates.But Kganyago, the chair of the IMFC, didn't leave it at that.
"Let me add something and say that institutions in society are created for a purpose," Kganyago said.See also: The Reserve Bank has a political red line – but nationalisation isn’t itThe trend, Kganyago said, is increasingly towards more independent central banks, not less independent ones. "The clearer the mandate of a central bank, the easier it is to hold a central bank accountable.
And so, whilst the central banks are given the independence to pursue their mandate, the flip side of independence is that of accountability; that central banks have got to be accountable for how well they are doing in fulfilling their mandates.