Opinion - RBA Review
It is quite astounding that the recent review of the RBA was the first external review of the central bank and the operation of monetary policy in four decades.
Putting that aside, I support the recommendations of the Review Report that respond to the need for greater transparency and accountability from an institution that has far-reaching impact on Australia and Australians.
To me, transparency, accountability and diversity are the key themes that permeate the recommendations, whether that be in the need for more clearly defined monetary policy, instituting open and transparent processes for appointments of external members to the RBA boards, increasing accountability through holding regular press conferences and publishing papers, or enhancing the diversity of perspectives and knowledge.
One of the most significant recommendations in terms of corporate governance is to establish both a Governance Board and a Monetary Policy Board, with the former to oversight the RBA’s organisational strategy, finances, strategic staff planning and risk management (including cyber risks) (Recommendation 12), and the latter with responsibility for monetary policy decisions and oversight of the RBA’s contribution to financial system stability (Recommendation 8). The Monetary Policy Board will require diverse perspectives and knowledge from its members, and its external members should be able to make a significant contribution to monetary policy setting through their expertise.
As outlined in the Report, these recommendations recognise that the current governance arrangements of the RBA fall far short of contemporary good practice, particularly with the concentration of authority in a single role and the current Reserve Bank Board playing a very limited oversight role (with little to no transparency) outside of monetary policy.
The Review recommends a memorandum of understanding be established between the RBA Boards. It will be interesting to see how these boards work together effectively in practice.
The final report ‘An RBA fit for the Future’ can be read here: https://lnkd.in/gYkTRBE5
Photo by Markus Winkler on Unsplash
