Financial stability to be \\\'main goal of central banks in 2040\\\'

Financial stability as the main goal for central banks in 2040 may change the relations among central bank, government and other supervisory authorities, a senior central banker said Thursday.
 "Central banks in 2040 are expected to be the main supervisors of financial stability issues. They will take help from other supervisors and indemnification from government if public money is involved," Deputy Governor of the Bangladesh Bank (BB) SK Sur Chowdhury said while presenting his paper 'What will Central Banks Look Like in 2040' at the concluding session of the five-day 29th SEANZA (South East Asia, New Zealand, and Australia) central banking course at a local hotel.
SEANZA is a regional forum comprising 20 central banks and four financial service regulatory authorities.
The forum was formed in 1956. It is one of the oldest and largest regional central bank groups, established to promote cooperation among central banks by providing intensive and systematic training courses for central bank staffs.
Mr. Sur, also chairman of the SEANZA Forum of Banking Supervisors, said ensuring financial stability requires cooperation among different supervisors.
"There may be debate about who should be in charge of handling the integrated stability issues," he said.
About separation of bank supervision from monetary policy function of central banks, he said the question of whether central banks should be involved in bank supervision is an old chestnut that central bankers and academics have debated for many years and practised in the years before the global financial crisis had swung towards separate bank regulators.
 "Bank failures, which are inevitable and sometimes desirable in a market system, frequently lead to public and political criticism of the supervisor which can damage the central bank's reputation and weaken its authority in the conduct of monetary policy," the senior central banker observed.
In 2040, an integrated approach to monetary and bank supervision would provide the most efficient set of procedures for diagnosing problems with banks and then prescribing the correct mix of solvency and liquidity measures required to resolve these problems, the deputy governor added.
He also said central bank's independence will still be a debatable issue in 2040. "Though many central banks will enjoy operational independence, worldwide independence of central banks would be difficult to achieve by 2040."
Among others, Emeritus Professor of Birmingham University Dr. Peter Sinclair and Executive Director of the BB Ahmed Jamal also spoke on the occasion.
Twenty overseas participants from 13 countries took part in the course, organised by the central bank of Bangladesh.
The participant countries were China, Korea, Indonesia, Macau, the Philippines, India, Malaysia, Nepal, Iran, Fiji, Germany, Sri Lanka, and Papua New Guinea.
Besides, 20 senior officials from the BB were participated in the course.