The Role of Ethics for Central Bank Senior Management: A Comparative Analysis of Recent Developments

Abstract

The proper management of ethics and conflicts of interest is important for banks and particularly essential for central banks. Much of central bank’s success hinges on their credibility in markets and their standing among the public and thus if the public perceives a bank’s management as lacking worthy judgement on issues of personal conduct, he may even have misgivings on management’s decision-making concerning matters of policy. Indeed the failure of a bank to manage conflicts of interest effectively could also lead to actions that curtail its operational autonomy. Taking into consideration these abovementioned particular issues, the paper will analyse the legal implications of particular cases where a conflict of interest may arise for management staff when they have private-capacity interests which could improperly influence their performance and responsibilities. It shall concentrate on those ethical issues which senior officials of central banks may face, and the comparative legal solutions applicable to those cases. The paper would also analyse the chief elements that contribute in banks’ efforts to minimise the potential for conflicts of interest, including an analysis concerning the increase in labour mobility that has not left central banks untouched, since senior staff increasingly serve their institution for shorter periods, thus bringing upfront the question of conflicts of interest once they leave their jobs.