The group of economists gathered under the banner of the SNB observatory – ‘The BNS Observatory’ – criticizes a certain lack of transparency of the SNB. They also deem the size of the issuing institute’s management board to be too small.
‘The SNB should be more transparent. It should not only publicize its monetary policy decisions, but also explain the alternatives for action considered and the reasons for which they were rejected’, ask economists Charles Wyplosz, Yvan Lengwiler and Stefan Gerlach, in the report published in Wednesday night through Thursday. They also consider it necessary to provide information on the diversity of opinions within the executive board of the Swiss central bank.
More generally, certain adaptations of the Law on the National Bank, which dates from 2003, would allow the issuing institution to better fulfill its mission today, notes the group of observers, noting that the world of banks plants has undergone significant changes over the past two decades.
Although the SNB stands out in international comparison for its great independence, this is not enough to conduct a good monetary policy. According to the three economists, such independence must go hand in hand with an increased obligation to provide information. But in terms of transparency, a prerequisite for the latter, the national bank ranks at the bottom of the pack.
The central bank provides only ‘limited’ information in its publications and public statements on the economic outlook and its monetary policy options, criticize the three observers. Many other central banks are very independent, but at the same time very responsible, they note.
Moreover, the executive board of the SNB, the decision-making body of the issuing institution, is smaller than in other central banks. However, size is important for the depth and robustness of the deliberations. In the opinion of the SNB observatory, this is also a question of democratic legitimacy. As a result, the executive board should be expanded, for example by integrating external members.
Automatic renewal of mandates
Looking at the length of the mandate of the members of the executive board, the economists also believe that the current practice of automatic extension until retirement should be reconsidered. The term of office of the members of the Monetary Policy Committee should certainly be long enough to guarantee their independence and benefit from their experience. However, terms that are too long might also prevent the contribution of new skills.
Finally, the SNB should, like many leading central banks and public financial institutions, subject certain aspects of its operations to regular external scrutiny.
/ATS
