NEWSMAKERS

• What Is A Central Bank Governor Worth?
• All's Well In The Euro Zone
• Bank Of Japan At The Cutting Edge
• Cricketing King's Unlikely Heroes
• Philippine Central Bankers To Defend Integrity
• Zimbabwe's Central Bankers Urged To Go
• Donald Winn Passes Away

What Is A Central Bank Governor Worth?
First published on www.CentralBankNet.com, 18 August 2003 http://www.centralbanknet.com/fullstory.asp?page=1&itemid=17097

What is the going rate for a really top-class central bank governor? Or even an average one? Five years ago this question would have been impossible to answer. Central bank salaries were guarded as closely as state secrets. Furtive inquiries could only be made over drinks on the fringes of international meetings. Hushed references to million-dollar fat cat pay packages abounded.

All this has changed. The million dollar salaries are mostly a figment of the imagination, though OECD central bank governors are not starving. Most are paid at a rate comparable to that of top politicians (like UK prime minister Tony Blair, who earns US$ 274,000 a year).

As a result of this wave of glasnost CentralBankNet has been able to conduct a straw poll of large central banks, and can now offer readers a few benchmarks. Unsurprisingly it turns out that there is indeed a "rate for the job". A cluster of OECD central banks (at least those which release the information) pay their governors a little over US$ 300,000 per year. There are however some surprising outliers.

Joseph Yam is almost certainly the best-paid central bank governor in the world, commanding over a million dollars a year to run Hong Kong's currency board, although his salary is a subject for regular debate in Hong Kong's legislative council. The Banca D'Italia's governor, Antonio Fazio has been reported to have a salary of up to $700,000, but CentralBankNet was unable to confirm this figure. At the other end of the scale Zdenek Tuma, governor of the Czech National Bank, manages on a more modest $110,000.

Several of those central banks which do release salary information are still rather coy about naming exact amounts. The European Central Bank for instance prefers to list the total salary for the whole executive board, rather than coming clean about exactly what Mr Duisenberg takes home. However a little educated guesswork, and the observation that governors usually enjoy a stipend 20% larger than other executive directors, pins his wage down to around €370,000 in 2001, about US$ 417,000 at current exchange rates.

The full results of CentralBankNet's research is as follows:

Study of the league table reveals some surprises and anomalies. Alan Greenspan is paid less than the President of the New York Fed, and of the other Federal Reserve Districts. This is because the pay of the Board of Governors in Washington is determined by the US Federal government's executive pay guidelines, whereas presidents of the New York and other district reserve banks are employees of their institutions, which are technically private corporations and set their own guidelines (though in principle subject to approval of the Board of Governors).

As Professor Charles Goodhart has said, the Chairman's rate is "ridiculously low", and the Fed only manages to attract candidates of Greenspan's quality by offering "non-pecuniary attractions". The larger problem is that salaries of Board of Governors staff come in grades stepping down from that of the chairman, making it hard to pay properly those toiling below Mr Greenspan in less glamorous positions. The penurious pay levels go back to the traditional emphasis on public service, especially in the capital, as a vocation.

So who are the laggards in the new world of central bank transparency? The once mighty Bundesbank remains coy about the salaries of top executives, regarding them as a private contact with the board. But a spokesman did say that salary levels are "not comparable" with commercial banks. Similarly the figure is not public for the governors of the central banks in Spain and France. However, other central banks are sensing the change in the zeitgeist. From next year the Central Bank of Iceland will reveal how much its top executives are paid. (See notes at bottom)

All's Well In The Euro Zone
Contrary to incessant and repetitive media mutterings about the sickly euro zone economy, it would seem that in fact all is well. So well, in fact, that the ECB has decided that there is really no need for its forthcoming fortnightly meeting because there simply isn't anything worth talking about.

According to an ECB spokesman, "There weren't enough points on the agenda." Oh well. It was going to have been a telephone conference, and would have been devoted to more technical subjects, unlike the other fortnightly meeting of the ECB's governing council which tends to interest rates.

But the more technical issues are satisfactorily under control. Presumably the fact that, for example, a counterfeit €300 bill has recently been discovered to be doing the rounds does not come under their remit. Quite sensible then to cancel, surely anyone else would have done the same. Why waste valuable time when the sun is shining and the weather so sweet?

Cricketing King's Unlikely Heroes
When Mervyn King was the guest of honour last week at the lunch-time chat on BBC Radio 4's cricket programme "Test Match Special", he revealed his affection for - and knowledge of - the game as well as a certain ambition for socialite status. The governor was becomingly modest about his own prowess on the pitch, but revealed that he does bowl his slow left-armers for an invitation side in which Lord Kingsdown, a former governor, keeps wicket.

Commended by the interviewer on his grasp of cricket statistics over the last forty years - King could recall the scores from a game he had been taken to as a boy in 1963 - the interviewer said he felt was reassured that the nation's finances were in such capable hands. King demurred saying: "The only figures I can remember are from sports". Indeed the governor admitted he had arranged for the score from a recent semi-final involving his beloved Worcestershire to be relayed to him at a meeting he was attending.

The conversation broadened and, as is the tradition on the programme, King was asked to name his three choices for dinner party guests of all time. John Maynard Keynes? Adam Smith? Ricardo? Bagehot? Karl Marx? Not a bit of it.

Che Guevara, Marxist revolutionary and student-poster-icon was his first answer. King, however, diplomatically stressed Guevara's anti-inflationary credentials as governor of the central bank of Cuba rather than his penchant for Molotov cocktails. His second choice was Chou En-lai - Chinese Communist leader, long-marcher and master diplomat. King asked: What would he make of China now?

King's final choice was French actress Catherine Deneuve. To get an idea perhaps of what King sees in her visit this most enchanting of film actresses' website at http://catherine.pinknet.cz/en-index.html

1. Midpoint of declared 2002 salary range of HK$8.5m-HK$9m.
2. ECB 2001 annual report. The 6 executive directors of the ECB were together paid 1.9m. We have assumed that the President is paid 20% more than the other executive directors, making his salary approximately 370,000.
3. This is the dollar value of the midpoint of Mr Macfarlane's disclosed salary range of A$490,000 - A$495,000
4. Bank of Japan website
5. This is the dollar value of the midpoint of Mr Bollard's disclosed salary range of NZ$430,000 - A$439,000 Other sources: Netherlands: source Annual Report 2002 page 169; Switzerland: source Annual Report 2002 page 92; UK: source Annual Report 2003 page 43; NY Fed Annual Report 2002 page 281; Sweden: Source press office; Norway: Source Annual Report 2002 page 75.