centralbank
Structure and Independence of Other Foreign Central Banks
In contrast to the Federal Reserve System, which is decentralized into 12 privately owned district banks, central banks in other industrialized countries consist of one centralized unit that is owned by the government. Here we examine the structure and degree of independence of four of the most important foreign central banks: the Bank of Canada, the Bank of England, the Bank of Japan, and the European Central Bank.
Bank of canada
Canada was late in establishing a central bank: The Bank of Canada was founded in 1934. Its directors are appointed by the government to three-year terms, and they appoint the governor, who has a seven-year term. A governing council, consisting of the four deputy governors and the governor, is the policymaking body comparable to the FOMC that makes decisions about monetary policy.
The Bank Act was amended in 1967 to give the ultimate responsibility for monetary policy to the government. So on paper, the Bank of Canada is not as instrumentindependent as the Federal Reserve. In practice, however, the Bank of Canada does essentially control monetary policy. In the event of a disagreement between the bank and the government, the minister of finance can issue a directive that the bank must follow. However, because the directive must be in writing and specific and applicable for a specified period, it is unlikely that such a directive would be issued, and none has been to date. The goal for monetary policy, a target for inflation, is set jointly by the Bank of Canada and the government, so the Bank of Canada has less goal independence than the Fed.
Bank of England
Founded in 1694, the Bank of England is one of the oldest central banks. The Bank Act of 1946 gave the government statutory authority over the Bank of England. The Court (equivalent to a board of directors) of the Bank of England is made up of the governor and two deputy governors, who are appointed for five-year terms,
In contrast to the Federal Reserve System, which is decentralized into 12 privately owned district banks, central banks in other industrialized countries consist of one centralized unit that is owned by the government. Here we examine the structure and degree of independence of four of the most important foreign central banks: the Bank of Canada, the Bank of England, the Bank of Japan, and the European Central Bank.
Bank of canada
Canada was late in establishing a central bank: The Bank of Canada was founded in 1934. Its directors are appointed by the government to three-year terms, and they appoint the governor, who has a seven-year term. A governing council, consisting of the four deputy governors and the governor, is the policymaking body comparable to the FOMC that makes decisions about monetary policy.
The Bank Act was amended in 1967 to give the ultimate responsibility for monetary policy to the government. So on paper, the Bank of Canada is not as instrumentindependent as the Federal Reserve. In practice, however, the Bank of Canada does essentially control monetary policy. In the event of a disagreement between the bank and the government, the minister of finance can issue a directive that the bank must follow. However, because the directive must be in writing and specific and applicable for a specified period, it is unlikely that such a directive would be issued, and none has been to date. The goal for monetary policy, a target for inflation, is set jointly by the Bank of Canada and the government, so the Bank of Canada has less goal independence than the Fed.
Bank of England
Founded in 1694, the Bank of England is one of the oldest central banks. The Bank Act of 1946 gave the government statutory authority over the Bank of England. The Court (equivalent to a board of directors) of the Bank of England is made up of the governor and two deputy governors, who are appointed for five-year terms,