INSTITUTIONAL MODELS OF CENTRAL BANK ACTIVITIES SUPERVISION

Abstract

Accountability of the central bank and its monetary policy to the public is one of the key principles of its activity, along with the central bank's mandate (objectives and functions), its independence and decision-making system. Based on the analysis of theoretical sources and international experience, it is established that the accountability of the central bank can be exercised at three levels: internal control, accountability to supervisory bodies, accountability to the parliament or the president. It is determined that the topics of scientific research on the accountability of central banks are focused around issues of the development of institutional forms of accountability; harmonization of accountability, transparency and independence of central banks; improvement of corporate governance in central banks, and development of normative and legal framework for the functioning of supervisory boards. The main focus is on the role of supervisory boards in ensuring proper accountability of the central bank. Typical forms of supervisory boards’ interaction with the executive management of the central bank are summarized, those include: the single board model, dual board model, the specialized committee model, and the supra-central governance model. The key disadvantages and advantages of these typical forms are identified. The fundamental legislative principles of supervisory boards functioning are formulated, those include the specification of their supervisory responsibilities, creation of an exhaustive list of functions under their control, and the clear procedures for executive management’s reporting to them. It is substantiated that an important component of effective supervisory boards is their ability to conduct an impartial assessment of the central bank’s executive management, for which it is advisable to enhance their functionality with independent analytical units.

Problematic issues of the national central bank accountability system are identified, with the formulation of proposals for its improvement, which consist in a clear division of powers between the supervisory board and the executive management (in particular, regarding drawing up strategic documents), regulation of the process of reporting by the bank’s executive management on the exercise of their powers (in particular, regarding compliance with monetary policy principles), creation of an independent analytical unit under the supervisory board.