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Central Banking’s New Face

LONDON – A changing of the guard is underway at many of the world’s leading central banks. Haruhiko Kuroda is now installed as the governor of the Bank of Japan (BOJ), faced with the daunting task of ending two decades of stagnation. Mark Carney, the Bank of Canada’s current governor, who is set to take over as the governor of the Bank of England (BoE) in July, is already making his presence felt in British monetary-policy debates. And in the United States, the expected conclusion of Ben Bernanke’s term as Chairman of the Federal Reserve Board in January is already inviting speculation about his successor.

The only holdouts among the world’s leading economies are the eurozone and China. But that does not necessarily imply constancy. Mario Draghi has been the president of the European Central Bank for barely a year, and the governor of the People’s Bank of China, Zhou Xiaochuan, was almost replaced when he reached retirement age in February.

Twenty years ago, such developments would have interested mostly bankers and businesspeople. But, since the global financial crisis, the need to revive and sustain economic growth in the US, the United Kingdom, and Japan – and to avoid financial collapse in the eurozone – has prompted major central banks to be more outspoken and pursue more aggressive monetary policies, including unconventional measures like quantitative easing (QE). As a result, many central bankers have become household names; some even have tabloid nicknames, like “super Mario” Draghi.

This new prominence has also forced some central bankers to reassess their decision-making processes. In Japan, outsiders recently got a rare glimpse into the BOJ’s activities when minutes of a policy meeting were leaked. Likewise, the accidental release a day early of the minutes from the Fed’s March rate-setting meeting to more than 100 people, including banking executives, congressional aides, and bank lobbyists, raised questions about how the bank controls the disclosure of privileged information.