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Local News>Restructure BOJ - Wehby proposes new central bank modelSabrina Gordon - Business Reporter |
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THE CHANGE in the leadership of the Bank of Jamaica (BOJ) should be used to review the governance structure of the central bank, says Don Wehby, who suggests that the chair-manship be divorced from the governorship and that a monetary committee be put in place to set interest rate policy.
"It is now an opportunity to really look at the central bank to determine what governance structure needs to be in place in order to have an efficient system," said Wehby, who, up to July, was minister without portfolio in the finance ministry.
The former senator is back at his old company GraceKennedy Limited as group chief operating officer after two years in government, and it is in that role that he addressed a forum organised by subsidiary First Global.
Wehby suggests that the current structure at the central bank, where Derick Latibeaudiere and other governors before him headed the board, ran the bank and was the man setting interest rates, did not align with good corporate governance principles.
"I believe the governor is a technical person that deals with monetary policies and issues while the chairman should be embedded with stronger administrative and leadership skills to deal with the operations and guide the policies at the central bank," Wehby said.
But such a structure obtains nowhere else, a fact he acknowledged, but said nothing stops Jamaica from pioneering a new model.
BOJ's structure includes a board of directors, an executive management council and a management council.
The governor also has overall control of both councils.
The executive council is made up of deputy governors, as well as the general manager and the Bank's general counsel/corporate secretary, while the management council consists of all members of the executive management council, as well as six senior officers. The governor is appointed by the Minister of Finance and is responsible for the policy and general administration of bank.
The monetary committee recommended by Wehby would, he said, make decisions on monetary policies and issues. It should, he said, be confined to nine members - five from the central bank and the finance ministry, and four independent appointees, including top economists.
"I think it is not healthy for one person to have so much power in determining such important economic drivers as interest rate and exchange rates," he said at the Wednesday forum in Kingston.
The committee's decisions should cover interest rate movements, reserves requirements and currency market transactions, and must be grounded in the bank's objectives and a thorough assessment of current situation in the economy, outlook for the economy, monetary issues and financial stability, he said.
"We have some talented Jamaican experts in managing economies and now is an opportunity to tap into that expertise," said Wehby.
For transparency, the minutes of the committee meetings should also be made public.
"These are serious times, therefore these reform programmes must be implemented as quickly as possible," said the GraceKennedy executive, the No. 2 man at the conglomerate.
"This is not the time to put our hands down; now is the time for all of us to work even harder than before," he declared.
sabrina.gordon@gleanerjm.com