Legal Risks and Good Governance for Central Banks and Supervisors
4-day intensive residential programme, 4 September
- 8 September 2005
Venue: Christ's College, Cambridge
Course Director: Professor René Smits, Chief
Legal Advisor, Netherlands Competition Authority
LEGAL RISKS AND GOOD GOVERNANCE FOR CENTRAL BANKS AND SUPERVISORS
Over the last decade, the environment in which legal advisers to central banks and financial market authorities operate has undergone far-reaching changes. These legal and institutional changes are continuing. They bring with them new challenges and risks.
As the mandates of central banks and regulatory authorities change, their legal framework must be updated and strengthened. As calls for accountability increase, they need a solid legal basis on which to justify their decisions and defend their governance structures.
This four-day residential course offers legal officers a chance to meet and consider, in practical terms, how best to react to this changing landscape. The course addresses four key areas:
Legal risk profile for central banks and supervisors: Nobody can ignore the growing readiness of those with a complaint against the central bank or supervisory authority to take legal action. How can this challenge best be met?
Good governance: Senior decision makers recognize the critical importance of good governance for central banks and supervisory agencies: it is the foundation of institutional credibility. However, the appropriate model of internal governance structures can be elusive. The group will hear how official-sector institutions are implementing good governance, and consider lessons to be drawn from international comparisons.
Accountability: National and international actors demand more transparency and accountability. How can central banks and regulatory authorities best react?
International developments: Financial market authorities in industrial and developing countries are under enormous pressure to stamp out money laundering and meet a host of international standards. The delegates will learn latest trends in best practice.
Underpinning all these points is the recognition that legal officers need to be proactive in identifying, assessing and addressing the legal and governance risks which their institutions are likely to face in a fast-changing world. This training course/seminar offers senior law officers an up-to-date guide to the implications of central bank policymaking and restructuring in the light of selected recent experience and emerging international standards of best practice.
This course offers an opportunity for delegates to learn from expert practitioners and discuss their challenges and experiences with peers in an informal setting.
For more information about this exciting programme, please take a few moments to look at the detailed course contents presented on the pages which follow.
I look forward to welcoming you to Cambridge.
Yours sincerely,
William Clarke, PhD, CBE
Chairman, Central Banking Publications
The challenge
of changing central bank mandates
Professor
René Smits
Chief Legal Advisor, Netherlands Competition Authority
As the role of central banks and
regulatory agencies has evolved, the job of managing these institutions
has become more complex. Even agencies with well-defined mandates and
clear accountability structures must strive to define their role and
carve out an institutional remit. This session concentrates on the key
changes which affect central banks and regulatory agencies and investigates
how different statutes/legal frameworks can affect governance and performance.
Lessons from redrafting a central bank mandate
Peter
Merz
Suter Howald, Attorneys at
Law
A changing role may require modifications
to the legal mandate of central banks or regulatory agencies. This session
will address what that process involves. The speaker, formerly a lawyer
with the Swiss National Bank, will discuss the recent change to that
central bank’s mandate, including associated legislative issues.
He will also evaluate the outcome of the changes, and draw lessons for
other countries from the experience of changing the mandate.
Legal risks for central banks and supervisors
Charles
Proctor
Partner, Nabarro Nathanson
As central banks and supervisors
perform their many public policy roles (in monetary policy, and as supervisor,
market participant, and agent of the government) they are exposed to
a variety of legal risks. Increasingly, they may find themselves forced
to account for their actions in a judicial setting. With particular
reference to common law jurisdictions, the speaker will examine key
recent cases including that of the Bank of England and BCCI.
Case studies on governance and legal issues
This session will invite delegates
to present and discuss challenges and developments related to governance
and legal issues in their organisation.
Michel Tison
Financial Law Institute, Ghent University
Increasingly, banking supervisory action by public authorities, whether central banks or independent supervisory agencies, is being questioned in court through liability claims. This session examines the implications of this trend in civil law jurisdictions and in European Union law, and reflects on the essential role of banking supervisors in this perspective.
Codes of governance for central banks
Thomas Baxter
General Counsel, Federal Reserve Bank of New York
In private-sector financial institutions, a growing body of law and best practices essentially prescribes core corporate governance practices. But the differing mandates and legal status of central banks and financial regulators make it more difficult to discern the common governance practices that these types of entities should follow. The speaker will discuss the scope for adapting private-sector codes of governance to the public sector, in particular drawing on the experiences of the Federal Reserve Bank of New York in its plans to adopt policies based on Sarbanes-Oxley.
Trends and best practice in central bank governance
Tonny Lybeck
Senior Economist, Monetary and Financial Systems Department, International Monetary Fund
Accountability, autonomy and transparency are now regarded as best practice for central banks. There is less agreement on how to achieve this though, and the governance structures of central banks vary considerably. The speaker will draw on an IMF survey which he co-authored in order to look at trends in the organisation of central bank boards and management, and the conclusions on what might constitute best practice in this field.
Corporate governance at the ECB
Inigo Arruga
Senior Legal Counsel, ECB
Even if the ECB is a quite unique body, the development by the ECB of a governance structure on the basis of the treaty establishing the European Community and of its statute may contribute to find solutions to the challenges of other countries and areas.
Legal
issues surrounding central bank market intervention
Stefan
Gannon
General Counsel, Hong Kong
Monetary Authority
When central banks intervene in markets,
they do so with immense resources, privileged information, and objectives
different from private sector market participants. They must fully understand
the legal issues surrounding their actions, and ensure that they do not
abuse their position. The speaker will discuss this subject with relation
to the HKMA’s experiences of intervention, including its large and
controversial domestic equity purchases in 1998.
Central Bank ownership issues
Daniel
Lefort
Deputy General Counsel, Bank
for International Settlements
Despite the public-sector purpose of
modern central banks, many retain ownership structures which include an
element of private ownership. This raises certain challenges regarding
control, governance and profits which must be dealt with within a clear
legal structure. The ownership of reserves and rights over profits can
also be a source of contention in countries where the central bank is
independent but government owned. This session will discuss these issues
and countries’ experiences
Legal ramifications of monetary
union
Iwa
Akinrinsola
International Financial Law Unit, Queen
Mary, University of London
Monetary union is a possibility or reality for a number of countries around
the world, and brings with it significant legal implications for the central
bank, covering areas including structures of authority, legal obligations
and liabilities, and profit-sharing arrangements. The speaker will discuss
these issues with particular focus on West African monetary union, with
comparative-law insights into existing unions in francophone Africa and
Europe.
Creating a legal framework for microfinance
Mamiko
Yokoi-Arai
Lecturer
in Law, Queen Mary, University of London
The provision of microfinance in poor and developing countries is an important and growing feature of the financial system, yet is often inadequately dealt with in law and financial regulation. This session will discuss some of the challenges in extending regulation to microfinance institutions, and where it is and is not appropriate to do so.
Accountability
and independence for central banks and supervisory agencies
Rosa
Lastra
Senior Lecturer in Law, Centre for
Commercial Law Studies, Queen Mary, University of London
An independent central bank
is a particular kind of institution that is independent in some respects
but highly constrained in others, constrained by the goal and by the statutory
objectives and by the demands of democratic legitimacy and accountability.
Though a consensus has been reached on the definition and adequate ‘quantum’
of independence, the debate is still going on regarding the definition
and adequate ‘quantum’ of accountability and transparency.
What do we mean by these concepts? How to reconcile the “lawyer’s
view” with the “economist’s view”? In the context
of the ongoing debate of the governance structure for financial regulation
and supervision in Europe (Lamfalussy framework) how can questions of
accountability be addressed properly?
Extraterritoriality and US financial regulation
Kern
Alexander
Judge Institute of Management, University of Cambridge
The US Financial Services and Modernization Act 2000 and
the recent PATRIOT Act provide US authorities with substantial new powers
to regulate the global activities of multinational banks. This raises
profound legal and cooperation issues for central banks. This talk will
also address issues of extraterritorial legal process regarding money
laundering. In its pursuit of Iraqi assets the US administration has sought
the confiscation of over half a billion dollars held outside its own borders.
The speaker will discuss the implications for national authorities and
payment systems of these developments.