Our 26th annual report grading the world’s central bankers considers their responses to the high-stress conditions wrought by the pandemic.
Central bankers in both developed countries and emerging markets have deployed innovative strategies to keep economies and financial systems around the world functioning as normally as possible in these unprecedented times. The US Federal Reserve cut interest rates to near zero, flooded the markets with liquidity and extended its bond buying into new areas as the extent of the crisis became clear. Most central banks did whatever it took to stabilize financial markets, including outright purchases of large amounts of risky securities in emerging markets.
“Since the onset of the pandemic, central banks have resorted to all kinds of measures—conventional and unconventional—to salvage their respective economies,” says Harvesh Kumar Seegolam, governor of the Bank of Mauritius. “Central banks are being looked up to as saviors in these testing times,” he adds in an official statement.
“The current crisis has ripped up the rule book,” says Liam Peach, an economist specializing in emerging Europe at Capital Economics. These bond purchases by emerging market central banks are aimed primarily at reducing credit spreads and stabilizing the financial system, rather than the true quantitative easing that was done to influence monetary policy in developed markets, he wrote in a report.
There is a risk that large-scale bond purchases could be used over a prolonged period to help finance government deficits, particularly in Brazil, or in other countries where central banks are highly politicized, such as Poland and Romania, according to Peach. Many emerging market central banks have been successful, however, in restoring stability in local bond markets and even reversing early panic selling.
Many central banks relaxed reserve requirements and encouraged banks to lend, particularly to small and micro enterprises, which will play a critical role in spurring future economic growth. At the same time, a rising tide of nonperforming loans and ongoing economic uncertainties leave little room for complacency about the sustained health of the financial system.
PROFILES BY REGION
North America | Latin America | Europe | Asia-Pacific | Middle East & Africa
NORTH AMERICA
CANADA
Tiff Macklem | GRADE: TOO EARLY TO SAY
The Bank of Canada kept its benchmark interest rate unchanged at 0.25% at its July meeting, the first policy gathering since Tiff Macklem took over as governor from Stephen Poloz, who completed his seven-year term in June. “Our message to Canadians is that our interest rates are very low and they’re going to be there for a very long time,” Macklem said at a press conference. The central bank is also continuing with its policy of buying up billions of dollars of government bonds to increase liquidity and encourage lending and investment.
Macklem, a former senior deputy governor at the Bank of Canada, was most recently dean of the Rotman School of Management at the University of Toronto. He assumes his new role at a time when the Canadian economy is expected to contract by 8% in 2020 before growing 5% in 2021.
UNITED STATES
Jerome Powell | GRADE: A—
The barrage of policy measures announced by the Federal Reserve following an unscheduled Sunday meeting on March 15 far exceeded anything the Fed had ever done before. Reacting with speed, breadth and intensity, the Fed set an example for policymakers around the world about how to tackle what was unfolding as the worst recession since the Great Depression.
Less than two weeks after cutting interest rates by 50 basis points, the Fed lowered the federal funds target 100 basis points to a range of zero to 0.25% and vowed to maintain rates at that level until the economy was back on track to achieve “both stable prices and maximum sustainable employment,” as specified in the Fed’s mandate. It also cut the discount rate 125 basis points to 0.75% and lowered reserve requirements for thousands of banks. The Fed launched a $700 billion quantitative easing program involving increased purchases of Treasury and agency mortgage-backed securities. New credit facilities were introduced to backstop the smooth functioning of a range of financial markets. What’s more, the Fed expanded currency swap arrangements with foreign central banks, with lower rates and extended maturities, to ease conditions in the dollar funding markets.
For those who fretted that the Fed has used up all of its policy tools, the Fed followed with a new twist. It agreed to buy the bonds of “fallen angels,” companies that lost their investment-grade ratings due to the crisis. Powell ruled out negative interest rates, but he disclosed that the Fed’s policy panel had discussed yield-curve targeting—a policy used during World War II to keep borrowing costs down—but decided not to use it for the time being.
LATIN AMERICA
ARGENTINA
Miguel Ángel Pesce | GRADE: TOO EARLY TO SAY
The Central Bank of Argentina (BCRA) was supporting President Alberto Fernandez’s efforts to help the economy by cutting its policy rate in half, below the rate of inflation, even before the Covid-19 pandemic started. In so doing, however, the BCRA, which is not independent from political control, undid the efforts of the previous government to subdue inflation and ensure the long-term stability of the economy.
“In Argentina, the independence of the central bank has been threatened by political instability and the monetization of the deficit,” says Quinn Markwith, Latin American economist at Capital Economics.
Pesce, who was appointed in last December, right after the arrival of the new government, justified his interest rate policy by arguing that high rates have failed to bring inflation under control and the bank should aim to support economic activity by bolstering lending. The BCRA also abandoned its prior pledge, supported by the International Monetary Fund (IMF), to hold the monetary base constant. Instead, by financing government deficits, it allowed a substantial uptick in the level of pesos in circulation.
“Those efforts have ramped up in the wake of the crisis,” says Jeffrey Lamoureux, head of Americas country risk at Fitch Solutions. “In addition, the bank is providing subsidized credit lines targeting businesses in need of bridge loans while setting an interest-rate floor on long-term deposits in order to mitigate the disincentive to saving. While these efforts appear to be forestalling an immediate financial crisis, they are likely undermining the long-term health of the financial system by eroding trust in the peso as a store of value.”
BAHAMAS
John Rolle | GRADE: C+
With its dependence on tourism, the Bahamas economy is particularly vulnerable to the Covid-fueled global economic crisis; the island nation’s GDP is expected to decline by 20% in 2020. In August, the Central Bank of the Bahamas reiterated its policy of keeping the Bahamian dollar pegged at par with the US dollar, focusing on protecting its foreign currency reserves, and maintaining the stability of the financial system. This has left little room for the bank to help revive the economy, however.
BOLIVIA
Guillermo Aponte Reyes Ortiz | GRADE: TOO EARLY TO SAY
Facing a worsening economic environment, the Bank of Bolivia has kept its peg to the dollar, burning foreign reserves, as it has for the last five years. The appointment last December of a new governor, Reyes Ortiz, to replaced Pablo Ramoz Sanchez, has not changed the bank’s policies, so far at least.
“The central bank has maintained a rigid peg of BOB6.91 to the US dollar for the last 12 years to support price stability,” says Lee Sutton, country risk analyst at Fitch Solutions. “We expect the next Bolivian president will maintain the peg upon taking office in December 2020, yet note the possibility that a new government opts to weaken the peg to relieve pressure on the central bank’s foreign currency reserves.”
BRAZIL
Roberto Campos Neto | GRADE: A
Despite the current recession and the unpredictable populist government of President Jair Bolsonaro, Roberto Campos Neto has built on the reputation of his predecessor, Ilan Goldfain, maintaining a conservative monetary policy geared to keep inflation under control. The Central Bank of Brazil (BCB) has continued to set historic nominal-rate lows for the Selic at 2% and is expected to do continue doing so in the coming months. Meanwhile, a slow economy has kept inflation near historic lows.
It likely also helps that over the last several years, the BCB has improved its ability to target inflation, which has helped anchor long-term inflation expectations. “The BCB has enacted a range of measures to ensure credit availability during the crisis,” says Lamoureux, “including cuts to reserve requirements, loan guarantees and repo operations that have injected an estimated total of R$2.7 trillion reais of liquidity, equal to 35.6% of GDP. Monetary stimulus efforts have undoubtedly supported the flow of credit through the financial system and supported its stability.”
While the BCB has operational autonomy, it does not have full independence. “The president can sack the governor at any point and appoint a replacement with the Senate’s approval,” says Markwith. A law making the central bank independent and giving its governor a four-year term, non-concurrent with the presidents, was proposed last year and is expected to be pushed through this year by Bolsonaro.
Thus far, however, the bank’s lack of formal autonomy has not raised major concerns. Campos Neto and his predecessor Goldfain “have both helped to build the institution’s credibility by pursuing orthodox policymaking, guided by their inflation target,” says Markwith, “but both have been fortunate to be working under governments which allowed them to do so.”
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CHILE
Mario Marcel Cullell | GRADE: A
The Central Bank of Chile (BCC) has been one of the most aggressive in Latin America in its efforts to revive the economy during the Covid crisis. Building on its independent status, good communication, and the reputation it has gained for keeping inflation low over the last 20 years, the BCC quickly launched a quantitative easing (QE) program.
The bank has also kept interest rates down. After lowering the monetary policy rate to its technical minimum of 0.50%, in early March, the BCC launched a $8 billion bank bond purchasing program, one of the most assertive steps into QE across emerging markets. It also opened a $24 billion credit facility on March 30 that aims to support a steady flow of credit to businesses and households; it expanded the facility by $16 billion on July 9. Two weeks earlier, it furthered its foray into QE with the launch of a $8 billion special asset purchase program.
More aggressive action may be on the way. In August, the government approved a new law enabling the BCC to buy treasury bonds in the secondary market.
COLOMBIA
Juan José Echavarría | GRADE: B+
Hoping to support the economy and provide liquidity during the Covid crisis, Colombia’s Bank of the Republic (BanRep) cut interest rates to a historic low of 225 basis points in March and initiated a limited program of quantitative easing. The new policy direction is expected to continue in the coming months.
“Weak growth and low inflation will allow the central bank to cut interest rates further,” anticipates Markwith. “We’ve penciled three more 25 basis-point cuts, to 1.75%, which is more easing than investors are pricing in.”
Despite these expansionary moves, BanRep has been largely successful at keeping inflation within its 2-4% target range in recent quarters, although weak domestic demand may push price growth below 2% by the end of the year.
Most likely, it will have a free hand to do so. “While there has been some public tension between Finance Minister Alberto Carrasquilla and BanRep Governor Juan José Echavarría over the latter’s comments on fiscal policy and inequality, BanRep is widely regarded as independent,” notes Sutton.
COSTA RICA
Rodrigo Cubero Brealey | GRADE: B–
The Central Bank of Costa Rica (BCCR) has extended its rate-cutting cycle and is urging the government to implement tax hikes and privatizations as means to secure a vital loan from the IMF. Cubero Brealey, a good communicator and frequent presence on public media, is aggressively pushing for a fiscal belt-tightening.
In the first eight months of this year, the central bank lowered its policy rate by 150 basis points to 0.75%, following 250 basis points in cuts in 2019. Costa Rica runs persistently wide fiscal deficits that limit the government’s space to use countercyclical stimulus measures to combat economic shocks.
“Which leaves monetary policy as a primary tool,” says Sutton. Fortunately, “inflation has remained well below the bank’s 3% year-to-year target in recent years and averaged 1% in the year through July 2020, which will allow for the bank to maintain a dovish stance.”
DOMINICAN REPUBLIC
Héctor Valdez Albizu | GRADE: B+
The Central Bank of the Dominican Republic’s (BCRD) solid reputation as a steward of the currency and the banking system has afforded it room to maintain an expansionary monetary policy during the Covid crisis. Hector Valdez Albizu, who was recently reconfirmed as governor of the bank by President Luis Abinander, benefits as well from the fact that the Dominican Republic is expecting a lower-than-the-regional-average GDP decline.
To counter the headwinds, the bank has cut interest rates by 100 basis points to 3.5% along with other measures to support economic activity. It has lowered reserve requirements and extended $15 billion in low-interest loans to small businesses and microcredit lenders, in line with its mandate to oversee the stability of domestic liquidity and banking activity.
“While the bank’s mandate prioritizes price stability and it has set an inflation target of 4% year-on-year plus or minus 1%, we expect inflation will remain well below the 3% lower bound in 2020 as domestic demand remains weak,” says Sutton.
EASTERN CARIBBEAN CENTRAL BANK
Timothy Antoine | GRADE: B
The Eastern Caribbean Central Bank (ECCB) has allowed monetary and credit conditions in the regional currency union to deteriorate in the first half of 2020 as it attempts to counter the impact of economic damage from the Covid crisis. The ECCB expects GDP in the group of island nations to decline between 10% and 20% in 2020 and does not foresee the economy returning to pre-pandemic conditions until 2023.
ECUADOR
Verónica Artola | GRADE: D
Ecuador has been hit hard by the double blow of the Covid crisis and the fall in oil prices, but in a dollarized economy, the Central Bank of Ecuador (BCE) doesn’t have an independent monetary policy and therefore has little role to play in counteracting the slump. Ecuador has restructured its external debt, however, offering a chance for a fresh start on fiscal policy.
“Inflation is extremely low thanks to the strong dollar,” observes Lamoureux, “and we view the major issue with the domestic financial system to be the government’s wide deficits. With help from the IMF, the bank has been working to provide stronger oversight of the domestic financial sector. But beyond that, it has little ability to help support the economy.”
EL SALVADOR
Nicolás Alfredo Martínez | GRADE: TOO EARLY TO SAY
Another dollarized economy, El Salvador is also suffering from a Covid-generated recession, including a strong decline in remittances from the US However, the decline in GDP this year is expected to be less severe than for neighboring countries. Nicolás Alfredo Martínez was appointed president of the Central Reserve Bank of El Salvador last December.
“As a dollarized economy, the Central Reserve Bank does not set monetary policy,” says Giblin. “As a result, El Salvador has slipped into deflation, with price growth averaging -0.5% year-on-year in 2020. However, we expect US dollar weakness in the quarters ahead to push inflation back into positive territory.”
GUATEMALA
Sergio Recinos Rivera | GRADE: B–
The Bank of Guatemala (Banguat) has trimmed its policy rate in response to the Covid pandemic and has been active in funding the government’s response to the economic and health crisis.
Through June, the bank had cut its monetary policy rate from 2.75% to 1.75% in response to the Covid-19 pandemic, Giblin notes. “We expect Banguat will lower its benchmark rate by an additional 25 basis points to 1.5% before the end of 2020 in order to support a rebound in economic activity following several months of a strict lockdown.”
Inflation averaged 2% year-on-year through July, below the bank’s 3-5% target band. The government’s funding needs are acute as it responds to the pandemic, and Congress has authorized Banguat to purchase up to $1.5 billion
HONDURAS
Wilfredo Cerrato | GRADE: A–
While the Central Bank of Honduras (BCH) has been extending itself to support a Covid-battered economy, lowering its monetary policy rate from 5.5% to 4.5%, GPD is still expected to decline 8% in 2020.
“Given that inflation has averaged 3.4% year-on-year in the year through July 2020, towards the lower limit of the BCH’s 3-5% target band, and economic activity remains weak, we expect the central bank to cut its monetary policy rate to 4% by the end of 2020,” says Giblin.
JAMAICA
Richard Byles | GRADE: B
Two major sources of revenue for Jamaica, remittances and tourism, have been badly affected by the Covid crisis and the negative trend of the US economy. The Bank of Jamaica projects the economy will shrink between 7% and 10% in the fiscal year 2020-21. It has offered support both by selling US dollars to accommodate an increased demand for foreign currency at a time of scarcity, and by floating an indexed bond that provides an edge against a future decline of the currency.
The development of a digital currency aimed at fostering financial inclusion, which the bank aims to test in the final months of this year, has been one of the main new elements in its strategy.
MEXICO
Alejandro Díaz de León | GRADE: B
The Bank of Mexico (Banxico), which has earned a reputation for keeping inflation under check, has been less active than others in the region at easing its monetary policy during the Covid crisis, both because the economic downturn started earlier and because Mexico was already experiencing relatively high inflation. Mexico entered recession last year and the economy is expected to shrink more than 10% in 2020; the bank cut its interest rate by 50 basis points to 4.5% in August.
“The above-target inflation may limit Banxico’s ability to reduce the rate further,” says Andrew Trahan, senior country risk analyst at Fitch Solutions, “even despite a historic economic collapse. We also note the differences between the bank board’s longer-serving, more-hawkish members and AMLO’s [President Andrés Manuel López Obrador’s] appointees, who were likely appointed in part for their more-dovish views, although this has not been a major obstacle to policy thus far.”
Other analysts expect monetary policy to become a bit more expansive over the remainder of the year. “Persistently weak activity should keep inflation within the central bank’s 2-4% target range over the coming months,” says Capital Economics’s Markwith, who sees the policy rate ending 2020 at 4%. “Further ahead, with the peso likely to strengthen and the US Federal Reserve set to stay on the sidelines, we expect Banxico to keep its policy rate lower for longer than investors expect.”
NICARAGUA
Leonardo Ovidio Reyes | GRADE: C–
With little independence, the Central Bank of Nicaragua (BCN) lacks an inflation target regime, relying instead on a crawling peg to keep inflation under check. It has maintained that peg, albeit at a slower pace of depreciation, despite rapid capital flight following protests and a government crackdown in mid-2018 that drained its reserves. “The BCN’s independence is a concern,” says Trahan, given the ruling FSLN party’s “tight control of most other governmental institutions.”
PARAGUAY
Jose Cantero Sienra | GRADE: A–
The Central Bank of Paraguay (BCP) has cut rates aggressively since last year, first due to a recession, then in response to the Covid crisis, but the modest size of the financial markets and a relatively small economy limit its room for action.
“Following cuts totaling 450 basis points since the beginning of 2019, Paraguay’s benchmark interest rate has reached a record low of 0.75%,” notes Simon Aborn, country risk analyst at Fitch Solutions. Even so, “inflation has fallen below the BCP’s target band of 2-6% year-on-year.”
PERU
Julio Velarde Flores | GRADE: B+
Building on its hard-won reputation for forward guidance, good communication, and reliably meeting its goals, the Central Reserve Bank of Peru (BCRP) has been proactive in supporting a recession-battered economy.
“The central bank has established its credibility by keeping inflation low over the past two decades,” says Markwith. “What’s more, Peru’s public finances are very strong, reducing the risk that the central bank would make excessive purchases of sovereign bonds to finance the government.”
The bank quickly accelerated its rate-cutting cycle to mitigate the economic impact of Covid-19, enacting 100-basis-point cuts in March and April to bring its policy rate to 0.25%. It is also extending up to S/60 billion in short-term loans and liquidity assistance to support the Finance Ministry’s fiscal stimulus program.
“The BCRP has indicated it will maintain a dovish stance until the economy regains its footing,” Sutton says, “and we forecast it will hold rates at 0.25% through the end of 2020, which implies that real interest rates will remain negative in the short term.” Inflation has averaged 1.8% year-on-year in 2020, well within the BCRP’s target range.
SURINAME
Maurice Roemer | GRADE: TOO EARLY TO SAY
Even as Covid batters its economy, the Central Bank of Suriname is struggling to move past a serious internal crisis. President Desi Bouterse fired the bank’s governor, Glenn Gersie, early last year, reportedly for refusing to support new spending ahead of a national election. Bouterse then replaced Gersie’s successor early this year with Sigmund Proeve as acting governor. Proeve had previously served as the bank’s head before being sentenced to a year in prison for illegally transferring $100 million to a hotel group linked to casino interests. He was quickly replaced by Maurice Roemer.
In July, Bouterse was voted out of office. The new government has a host of problems to manage and the bank does not appear to be high on its priority list, although it will face a huge task rebuilding the bank’s credibility as it looks for means to support its budget.
“Suriname will continue to lack monetary policy flexibility,” Standard & Poor’s commented in July. “Small capital markets and high dollarization of both bank assets and liabilities should continue to constrain the effectiveness of monetary policy. The central bank has limited monetary tools. Its primary tool is reserve requirements on local and foreign currency deposits, which it uses to manage credit growth in the local banking system.”
TRINIDAD AND TOBAGO
Alvin Hilaire | GRADE: B–
Interest-rate policy decisions by the Central Bank of Trinidad and Tobago (CBTT) follow the spread between the yield on its 3-month bill and the 3-month US Treasury bill. This provided room to cut rates by 150 basis points in early 2020. The islands’ economy, hit by low oil prices and a general recession, had not been faring well, contracting in seven of the last 10 years. Now, the Covid-19 crisis and an flux of migrants from Venezuela are making tensions even sharper.
When the Fed cut rates early this year, it widened the spread between US and Trinidadian 3-month bills, giving the CBTT space to cut rates without exacerbating capital outflows. Low oil prices and weak domestic economic activity have kept inflation contained. However, “in line with historic trends, the CBTT’s surprise 150-basis-point cuts in March will likely be slow to filter through to domestic credit availability,” says Simon Aborn, country risk analyst at Fitch Solutions.
URUGUAY
Diego Labat | GRADE: TOO EARLY TO SAY
In September, the Central Bank of Uruguay (BCU) reversed a seven-year-old policy of setting a quarterly growth rate target of the M1+ monetary aggregate as its main monetary tool, rather than relying on overnight lending rates.
“The results have been poor due to the economy’s high degree of dollarization, widespread indexation of prices and a low degree of financial intermediation,” says Lamoureux. “The BCU has been unable to break the cycle of high inflation because prices are determined in large part by the exchange rate.”
As anticipated, the new interim head of the central bank, Diego Labat, who was appointed in March, restored the overnight lending rate. In addition, the Monetary Policy Committee said it would maintain an expansive monetary policy in the face of the Covid crisis.
“If matched with a corresponding effort by the government to consolidate spending, adjust wages and reduce indexation,” says Lamoureux, “the move could help the bank re-establish inflation targeting credibility, in part by rebuilding confidence in the peso and reducing dollarization.”
VENEZUELA
Calixto Ortega | GRADE: F
The Central Bank of Venezuela (BCV), which is not an independent institution, has been heavily involved in the international dispute over $1 billion in Venezuelan gold reserves stored at the Bank of England. In July, the BCV won the right to appeal a ruling by the English High Court that recognized opposition leader Juan Guaido as the country’s president.
The BCV claims the gold reserves, saying it intends to use the funds to support the economy during the Covid crisis, while opposition leaders say that the government of President Nicolas Maduro aims to pay off his foreign allies.
Facing the pandemic and in an effort to widen funds available for loans, the central bank reduced the reserves that commercial banks are required to deposit to 93% from 100%. “With these actions, we are—at least in part—counteracting the economic impact, offering more room to productive credits without a negative result on inflation,” the BCV said in announcing the move.
But the country has much farther to go to restore its economy.
“Venezuela remains immersed in a deep economic and humanitarian crisis,” according to an IMF assessment. “Since the end of 2013, real GDP has contracted by 65%, driven by declining oil production, hyperinflation, collapsing public services and plummeting purchasing power. A continuation of these trends is projected for 2020, although at a slower pace. The acute humanitarian crisis has led to one of the largest migratory crises in history, with migration to neighboring countries expected to surpass 6 million—20% of the population—by 2020.”
EUROPE
BELARUS
Pavel Kallaur | GRADE: B–
Kallaur and the National Bank of Belarus have been contending with the economic fallout from the coronavirus and political interference over the past few months. In the run-up to August’s elections, which saw Alexander Lukashenko controversially reelected, reports emerged of him instructing the central bank to reduce the refinancing rate. The central bank has reduced the refinancing rate twice during the pandemic. At its August meeting, the rate was maintained at 7.75%, which analysts attribute to a depreciating ruble. Pressures on the currency remain, with Belarusians turning to foreign currencies. But Kallaur is confident that measures implemented by the central bank to encourage banks to support the real economy will ultimately have the desired effect.
BULGARIA
Dimitar Radev | GRADE: A
Radev and the National Bank of Bulgaria didn’t waste any time in shoring up confidence and stability in the country’s banking sector, implementing a wide range of measures worth approximately $5.1 billion to encourage banks to lend to consumers and businesses, particularly small and medium-size enterprises (SMEs) and microenterprises. Relief measures included a temporary moratorium on loan payments and cancellation of measures to increase banks’ countercyclical capital buffer that had been planned for this year and next. The central bank also established a €2 billion ($2.35 billion) swap line with the European Central Bank for as long as necessary to provide access to liquidity. Despite the economy shrinking by 10% in Q2, according to IMF estimates, ING analysts said Bulgaria performed the best in comparison with most other EU economies in the same period.
CZECH REPUBLIC
Jiří Rusnok | GRADE: A–
Rusnok reacted swiftly early in the pandemic to cut the main policy rate. Two rate cuts of 50 basis points and 75 basis points occurred within weeks of one another in March, with a third cut in May, which left the main policy rate at 0.25%. However, Rusnok sounded a note of caution about further cuts, which he says could negatively impact the financial sector. Despite sluggish consumer demand, inflation is likely to remain above 3% until the end of the year before falling at the start of next year, but analysts say it remains within the central bank’s tolerance band.
DENMARK
Lars Rohde | GRADE: B+
Unlike most of his central bank counterparts in the EU, which embarked on large-scale asset-purchase programs in response to the pandemic, Rohde dismissed the idea of quantitative easing early, as it didn’t mesh with his bank’s fixed exchange-rate policy, which keeps the Danish crown within a narrow band against the euro. Adhering to that policy explains why the Danish central bank bucked the trend by raising the key interest rate in March to -0.60% in an effort to ease downward pressure on the nation’s currency. Rohde was reported as saying that he would do “whatever it takes” to defend the peg against the euro. So far, he seems to be a man of his word, with the central bank intervening on a number of occasions in the currency markets to keep the crown stable against the euro.
EUROPEAN UNION
Christine Lagarde | GRADE: TOO EARLY TO SAY
Following in Mario Draghi’s footsteps was always going to be difficult for the ECB’s new governor. Lagarde got off to a shaky start in March when she apologized for a so-called “botched communication” regarding different spreads in sovereign bond yields, which led many to question the ECB’s role as the “lender of last resort,” particularly to countries like Italy, which at the time was the European country most impacted by the coronavirus pandemic. Six months later, however, banking analysts say Lagarde is already proving herself to be a “worthy heir” to Draghi. She has stated that she will “use the full potential” of monetary policy tools to shore up the eurozone economy in the wake of the pandemic-induced recession. Her Pandemic Emergency Purchase Programme (PEPP) quickly went from an initial €750 billion of asset purchases to €1.35 trillion, and its duration was extended until at least the end of June 2021.
GEORGIA
Koba Gvenetadze | GRADE: A–
The National Bank of Georgia used a combination of cuts to the key policy rate and the lowering of capital and liquidity requirements for banks to continue to fund the real economy during the pandemic. It has also intervened in currency markets to try to stem the depreciation of the lari, which, according to the IMF, has depreciated by 11.7% versus the US dollar since March 6. But the real star of the show has to be the measures that Gevenetadze and the bank implemented to ensure liquidity is available for banks to encourage lending, specifically to SMEs and microfinance institutions.The effort expended by Gevenetadze to enhance supervision of the banking sector has also paid off, with the central bank noting that “the Georgian banking sector is sound and has adequate buffers of capital and liquidity.”
HUNGARY
György Matolcsy | GRADE: B+
Matolcsy says the government and mortgage bond-buying program launched by the National Bank of Hungary in an effort to strengthen monetary policy transmission will continue for “as long as necessary.” He has demonstrated his willingness to use every tool in the monetary policy toolbox to try to minimize the impact of the pandemic on the real economy and see a return to growth. In addition to the asset purchases, the central bank also made changes to the base rate and overnight lending rate to provide more flexibility in terms of monetary policy. In August, headline inflation eased, said ING Bank, while core inflation, which stood at 3.9% in August, continued to accelerate, albeit at a much slower pace. “It’s clear that there is an issue with inflation and the central bank must admit that,” ING analysts wrote in an August research brief. With the base rate currently at 0.60% after cuts in June and July, Malolcsy has a little wiggle room, but analysts aren’t factoring in a sudden rate hike to keep inflation in check, which would be too harsh in the current economic climate.
ICELAND
Ásgeir Jónsson | GRADE: A–
Former central bank governor Már Guðmundsson provided the stewardship needed to steer the Icelandic economy through one of its most difficult periods during the recession that followed the global financial crisis. Now Jónsson is providing the continuity needed to promote financial stability during the pandemic. The IMF highlights measures taken by Jónsson and the Monetary Policy Committee to cut the key policy rate by 175 basis points, to 1%, and to reduce reserve requirements for lenders in order to enhance their liquidity position. Although the key policy rate is at a historic low, Jónsson hasn’t ruled out future rate cuts. The IMF says the Icelandic central bank has “allowed the exchange rate to adjust flexibly, while preventing disorderly market conditions.” In September, the central bank announced a program of FX sales of up to €240 million through to the end of the year.
NORWAY
Øystein Olsen | GRADE: C
While most central banks were attracting press headlines for their Covid relief measures, the Norges Bank and Olsen were in the headlines for different reasons over the summer. The central bank’s candidate to head up the country’s sovereign wealth fund, Nicolai Tangen, reportedly did not disclose potential conflicts of interest in terms of a controlling stake in a hedge fund, which he was later forced to liquidate. Tangen’s appointment was described as “an embarrassment for the central bank” by the Financial Times. Olsen defended the appointment but was criticized by the media for not doing more to resolve potential conflicts of interest. On the monetary policy side, Norway has instituted more-drastic cuts in rates than its Nordic neighbors to deal with the pandemic. The policy rate was slashed by 1.5% to zero.
POLAND
Adam Glapiński | GRADE: C
Glapiński cut the key policy rate close to zero, despite the negative impact that could have on banks. Monetary Policy Committee members called for “flat rates,” but swingeing cuts were implemented in May, with the reference rate being slashed by 40 basis points to 0.10%, the Lombard rate by 50bp to 0.5%, the rediscount rate by 0.44bp to 0.11% and the discount rate by 0.48bp to 0.12%. At its September meeting, the MPC kept rates unchanged. While the bank’s measures were designed to lessen the negative economic impact of the pandemic and to deal with an appreciating zloty, analysts believe May’s substantial rate cuts increase the negative side effects of low rates by threatening the stability of the financial sector.
ROMANIA
Mugur Isărescu | GRADE: B–
At its August meeting, the board of the National Bank of Romania continued to ease monetary policy, cutting the key policy rate to 1.50% from 1.75% and lowering the deposit facility rate to 1% from 1.25% and the Lombard rate to 2%. Isărescu has plenty of wiggle room left, should he need it if economic conditions worsen.The central bank reported that financial market conditions had improved as a result of monetary policy decisions taken at the end of May when the rate-cutting cycle started in earnest. Isărescu, who has held his position at the bank since 1990—making him one of the longest serving governors in the world—acted swiftly and convincingly to shore up liquidity for Romanian banks by opening a repo facility with the European Central Bank.
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RUSSIA
Elvira Nabiullina | GRADE: A–
Some analysts were expecting more aggressive action from Nabiullina in terms of the size and scale of rate cuts, given that Russia was one of the countries most impacted by the pandemic in terms of total numbers of confirmed cases, coupled with a slump in oil prices. Starting in April, the Bank of Russia cut the benchmark repo rate four times—with the latest cut of 25 basis points coming in July—in an effort to bring inflation closer to the bank’s 4% target and minimize the risk of disinflation. However, some analysts had factored in bigger cuts of 50 basis points. Nabiullina’s latest rate cut may not have pleased analysts, but it did give her room to maneuver if disinflationary trends strengthen.
SWEDEN
Stefan Ingves | GRADE: B+
Swimming against the tide in terms of the country’s handling of the pandemic—no lengthy lockdowns for the Swedes—it is hardly surprising that the central bank of Sweden, Sveriges Riksbank, also deviated from usual practices when it came to monetary policy. With the key reference rate at 0%, Ingves was never going to follow the conventional rate-cutting route. Instead, the Riksbank embarked on a relatively large asset buying program, extending the framework for asset purchases from 300 billion Swedish krona ($33.7 billion) to 500 billion krona up until the end of June 2021. In September, the bank will also include purchases of corporate bonds in its asset buying program for the very first time. According to Reuters, the bank plans to buy $1.16 billion of corporate debt between September 1, 2020, and June 30, 2021.
SWITZERLAND
Thomas Jordan | GRADE: C
With the key policy rate already in negative territory (-0.75%), Jordan’s main monetary policy tool for handing the economic fallout from the pandemic was instead interventions in the currency markets to defend an appreciating Swiss franc. The question some analysts are now asking is: How long can Jordan base his monetary policy primarily on FX market interventions? “At some point, things might get complicated,” ING analysts wrote in a March 2020 research note. ING points out that the US could place sanctions on Switzerland for so-called “currency manipulation” based on any excessive increase in reserves held by the Swiss National Bank. Jordan may be running out of policy options.
TURKEY
Murat Uysal | GRADE: D
Interventions by the central bank in currency markets to support a depreciating lira, which hit a record low in May, have failed to deliver the desired outcome. Many are predicting a looming currency crisis. “Foreign-currency reserves have been drifting downward for years on both a gross and a net basis, but are now at a multidecade low as a percentage of GDP because of the central bank’s unsuccessful attempts to defend the lira since the beginning of 2020,” ratings firm Moody’s wrote of its September ratings downgrade. According to Moody’s, the central bank’s gross FX reserves have declined by more than 40% since the beginning of the year. Accusations of political interference in monetary policy still hang over the central bank. With Uysal’s predecessor, Murat Çetinkaya, being removed as governor of the central bank because he wouldn’t institute rate cuts, Uysal has been far more accommodating. A succession of rate cuts saw the policy rate plunge from 24% to 8.25%, where it currently stands. But many are demanding rate increases—which are likely to prove unpopular with President Erdogan—to deal with persistently high inflation.
UKRAINE
Kyrylo Shevchenko | GRADE: TOO EARLY TO SAY
Ukraine’s former central bank governor Yakiv Smolii, resigned with much fanfare in July this year accusing the government of interfering in monetary policy. In his resignation letter, Smolii said the National Bank of Ukraine “has long been under systematic political pressure,” which resulted in him making the difficult, but necessary decision to resign. “For months, the central bank has been pressurized to make decisions that are economically unsound, that focus on short-term, easy ‘victories,’ and that could take a tremendous toll on the Ukrainian economy and people in the long run,” he wrote. Smolii said his resignation was a signal that “a red line [was] about to be crossed.” His successor, Kyrylo Shevchenko, a former chairman of state-owned Ukrgasbank, has pledged to maintain the bank’s independence.
UNITED KINGDOM
Andrew Bailey | GRADE: TOO EARLY TO SAY
Former Bank of England governor Mark Carney, whose second term came to an end earlier this year, effortlessly steered the UK economy through the challenging years following the global financial crisis and Brexit uncertainty. Bailey has his work cut out for him, with the UK economy contracting by 20% in Q2, a significantly bigger slump in growth than that experienced by the eurozone and the economic uncertainties created by Brexit. Having already instituted two cuts in the base rate earlier this year, the bank’s Monetary Policy Committee kept the base rate (0.1%) on hold at its August and September meetings. Bailey feels the bank still has enough firepower left if further asset purchases are required. But given the “unusual uncertainty” surrounding the UK economy, negative interest rates aren’t being ruled out.
ASIA-PACIFIC
AUSTRALIA
Philip Lowe | GRADE: A
Australia’s central bank has had some early success with its use of yield-curve targeting. In mid-March, the Reserve Bank of Australia (RBA) announced a comprehensive monetary policy package to make sure the financial system has plenty of liquidity, address dislocations in the government bond market and provide low-cost funding to the banking system. The central bank also decided to lower funding costs across the entire economy by announcing a target of 0.25% for three-year Australian government bond yields.
In the weeks immediately following the RBA’s announcement, the bank used its balance sheet for government bond purchases of about 50 billion Australian dollars (US$38 billion) to support the yield target. Few purchases were required until early August, when the yield on 3-year bonds rose slightly. The RBA returned to the market with a smaller purchase to keep the yield in line. It said the yield target would remain in place until progress is made toward the goals of full employment and inflation.
AZERBAIJAN
Elman Rustamov | GRADE: B–
Elman Rustamov was reappointed in April to a sixth five-year term as governor of the Central Bank of Azerbaijan. The country’s economy and financial system have been pressured by low oil prices as well as shutdowns due to the pandemic. The central bank cut interest rates by 25 basis points at the end of January and again in June, bringing its benchmark rate down to 7%.
Substantial foreign exchange reserves and low debt provide room for the authorities to maneuver, but they remain fearful of weakening the manat currency, which was devalued in 2015 and 2016. The central bank said a decrease in the inflation rate to below 3% and a relatively stable foreign exchange market enabled it to cut rates in June. Reserve requirements were reduced and banks were allowed to restructure loans by extending payments.
BANGLADESH
Fazle Kabir | GRADE: C–
The Bangladesh parliament in July passed a bill raising the age limit for the central bank governor to 67 from 65, enabling Fazle Kabir to be reappointed for two more years. Kabir replaced Atir Rahman as governor in March 2016, following a cyber heist in which the central bank lost $80 million.
On April 1, 2020, the central bank imposed a 9% interest rate cap on commercial bank loans, which had the effect of limiting the supply of credit to small and medium-size enterprises. Representatives of the Association of Bankers called on Kabir to exempt SMEs from the rate cap, but Finance Minister Mustafa Kamal called the decision final.
Nonperforming loans doubled last year to more than $12 billion. The International Monetary Fund says reforming the banking system is one of the top priorities for the government in order to enhance the resilience of the economy, which is heavily dependent on garment exports and remittances.
CAMBODIA
Chea Chanto | GRADE: B
Cambodia was the fastest-growing economy in Southeast Asia last year, with GDP growth of 7.1%. However, tourism and garment exports have been hit hard by the coronavirus lockdowns and unemployment is rising. The central bank issued guidance for banks to accept late payments, but this is voluntary. Many of the largest banks are foreign owned.
The central bank doesn’t set an official interest rate, but the average savings deposit rate serves as a benchmark. In July, the government lowered the withholding tax on interest paid by banks and boosted finance for small businesses through a credit guarantee fund. The country’s borders with Thailand and Vietnam have reopened.
CHINA
Yi Gang | GRADE: C+
China’s central bank relied on no quantitative easing or direct buying of government bonds to stimulate the economy after GDP slumped by 6.8% in the first quarter, its first contraction on record. The heavy lifting was done by the Finance Ministry, which issued a record amount of special-purpose bonds. The People’s Bank of China lacks the freedoms enjoyed by most central banks and doesn’t make monetary policy.
New loans are expected to reach a record $2.7 trillion this year, an increase of about 20%, as the central bank has guided financing costs lower. In February, it cut the one-year loan prime rate by 10 basis points to 4.05%. In April, it trimmed the rate by another 20 basis points. The central bank lowered its bank reserve requirements at the direction of China’s cabinet. Governor Yi Gang says the peak of easing has passed and it is time to start considering the timely withdrawal of policy tools.
HONG KONG
Eddie Yue | GRADE: B+
The mandate of the Hong Kong Monetary Authority (HKMA) is to “keep the currency trading at HK$7.75-$7.85 to the US dollar.” It has $440 billion of reserves to accomplish this, or double the size of the monetary base. The fund that’s used to back the Hong Kong dollar posted an investment loss of $1.37 billion in the first half. Real GDP fell by 8.9% in the first quarter, its biggest quarterly contraction on record.
The HKMA cut regulatory reserves by half and increased banking system liquidity. It requested that banks grant 30,000 companies a six-month holiday on repaying loans.
New security laws for Hong Kong proposed by China would not change the fundamentals of the former British colony’s financial system, says Eddie Yue, CEO of the HKMA. However, the US administration warned that it would start paring Hong Kong’s special trade jurisdiction and treat it as just another Chinese city.
INDIA
Shaktikanta Das | GRADE: B–
The Reserve Bank of India (RBI), like many central banks, was already implementing an accommodative monetary policy when the coronavirus struck. The bank was trying to reverse a slowdown in economic growth and, therefore, liquidity conditions were kept ample. At off-cycle policy meetings in March and May, the RBI cut rates by an additional 115 basis points.
RBI governor Shaktikanta Das said on July 24 that India’s financial system was sound, but lenders should desist from extreme risk aversion, which “would have adverse outcomes for all.” In his foreword to the bank’s financial stability report, Das said banks should be increasing their capital levels to bolster their resilience.
INDONESIA
Perry Warjiyo | GRADE: B
Bank Indonesia was one of the first central banks to cut interest rates in response to concern about the impact on the economy of the coronavirus. On February 20, it lowered its key rate by 25 basis points. It cut the rate another 25 basis points in March to 4.5%. In May, Bank Indonesia (BI) purchased $1.6 billion of government bonds and lowered its reserve requirement. “There is still room for more interest rate cuts this year, thanks to consistently low inflationary pressures and the increasing need to boost economic growth,” governor Perry Warjiyo said at the time.
The central bank cut its benchmark rate another 25 basis points in June and again in July, as inflation slipped below its 2% to 4% target range. BI also agreed to expand its bond purchases, which by then had reached a total of $11.6 billion, and signed an agreement with the US Federal Reserve for a $60 billion repurchase line to ensure a steady supply of dollar liquidity.
JAPAN
Haruhiko Kuroda | GRADE: B
The Bank of Japan (BoJ) has plenty of experience in fighting deflation and weak economic growth. It unveiled a new package of measures in April and said it would purchase government bonds in unlimited quantities, up from an annual cap of $746 billion. The BoJ also increased its limits on purchases of corporate bonds and commercial paper, while doubling its annual limit on purchases of exchange-trade funds and real estate investment trusts.
Under its yield curve control policy, the BoJ maintains its short-term policy rate at negative 0.1% and the yield on 10-year government bonds at zero. At its June meeting, the central bank said it expected the economy to gradually recover in the second half of 2020 if the global pandemic subsided. Meanwhile, the BoJ increased its zero-interest lending to banks for on-lending to cash-strapped companies to $1 trillion from $700 billion.
KAZAKHSTAN
Erbolat Dossaev | GRADE: C
This has been a busy year for the Central Bank of Kazakhstan. It raised its policy interest rate by 250 basis points to 12% on March 10, citing the risk of pressure on the exchange rate and rising inflation following a steep decline in oil prices, the country’s main source of foreign exchange. A week later, the tenge currency fell 6.6% to an all-time low against the dollar after the central bank decided to let the currency float freely instead of drawing on its $90 billion of foreign exchange reserves to intervene in the FX market to support it.
The central bank lowered its policy rate to 9.5% in April and sold $1.1 billion from its rainy day National Fund in May to help the government with its growing deficit. On July 20, it cut the key rate to 9%, saying the economy was experiencing a deeper recession than expected.
KYRGYZSTAN
Tolkunbek Abdygulov | GRADE: C
The Central Bank of Kyrgyzstan raised its policy rate by 75 basis points to 5% on February 25 “to counter inflationary pressures as the economy strengthens.” Nevertheless, the som currency weakened in March, despite intervention by the central bank in the FX market to support it. On March 26, Kyrgyzstan received a $242 million loan from the International Monetary Fund for emergency balance-of-payments needs.
On June 15, Prime Minister Mukhammedkalyi Abylgaziyev resigned following allegations of irregularities by former cabinet members in the government’s sale of radio frequencies for mobile telecoms. A former first deputy prime minister, Kubatbek Boronov, was named to replace him. Meanwhile, the central bank held its policy rate at 5%, saying this was “consistent with the effort to anchor inflation and support the real sector of the economy.”
LAOS
Sonexay Sitphaxay | GRADE: B–
Laos and China agreed in January to facilitate the direct exchange of their currencies, the kip and the renminbi, without having to convert them first to dollars. The central bank of Laos made a commitment to keep the value of the kip within a 5% range against major currencies. Under new FX rules introduced in July, operators of currency businesses must be licensed by the central bank and may exchange currencies only at rates set by the central bank.
On March 30, as the economy went into lockdown to fight the spread of the coronavirus, the Bank of Laos lowered its policy rates 100 basis points each to 3% for loans of less than a week, 4% for loans of one to two weeks and 9% for loans of two weeks to one year.
MALAYSIA
Nor Shamsiah Mohd Yunus | GRADE: A
Bank Negara Malaysia Governor Nor Shamsiah Mohd Yunus, the second female governor of the central bank, is a dedicated public servant who stands firm on good principles, even against powerful pressure, according to former prime minister Mahathir Mohamad. He said in July that Nor Shamsiah rejected his request when he was prime minister to use the central bank’s reserves to pay off the government’s debt incurred by the failed 1Malaysia Development Berhad (1MDB). Nor Shamsiah served as a deputy governor under Zeti Akhtar Aziz, who was governor from 2000-2016, and she was part of a central bank team that investigated the 1MDB scandal.
But if she is firm, she is also flexible. Bank Negara Malaysia cut its overnight policy rate four times through July this year, for a total of 125 basis points, bringing it down to a record low of 1.75%.
MONGOLIA
Byadran Lkhagvasuren | GRADE: TOO EARLY TO SAY
A former deputy governor, Byadran Lkhagvasuren was named governor of the central bank last November, replacing Nadmid Bayartsaikhan, who resigned after Mongolia was added to the Financial Action Task Force’s “gray list” for failing to meet standards to combat money laundering.
On April 15, the central bank cut its benchmark rate 100 basis points to 9% to mitigate the economic slowdown related to the cornonavirus. On June 26, it extended repayment of consumer loans by 12 months and deferred mortgage payments. The commodity-dependent economy is expected to contract about 2% this year before rebounding in 2021.
MYANMAR
Kyaw Kyaw Maung | GRADE: C+
Kyaw Kyaw Maung headed the central bank for a decade under Myanmar’s military regime. When Aung San Suu Kyi came to power in 2016, she kept him on as governor of the central bank to promote economic stability. On March 12, the bank lowered its policy rate by 50 basis points to 9.5% to stimulate economic growth. Two weeks later it cut the rate another 100 basis points, and in April it lowered the rate from 8.5% to 7%.
Tourism, garments and agricultural exports were hit hard by the pandemic. The World Bank forecast under its baseline scenario that the country’s GDP growth rate would to recover to 7.2% in fiscal year 2021, but that it will take time for the economy to regain the size it would have been without Covid-19.
NEPAL
Maha Prasad Adhikari | GRADE: TOO EARLY TO SAY
The Nepal government appointed Maha Prasad Adhikari as governor of the central bank, Nepal Rastra Bank, on April 6 to fill the position left vacant for three weeks following the retirement of governor Chiranjibi Nepal. Adhikari, 57, was CEO of the Nepal Investment Board.
On April 30, the central bank announced a relief program for entrepreneurs and told banks to reduce interest rates by 200 basis points. In July, Nepal Rastra Bank said the repayment deadline on installment loans would be extended by a maximum of one year, depending on the degree of impact from the pandemic. For the first time, banks were required to extend a minimum of 15% of their total loans to micro, small and medium-size enterprises. By July 2023, banks will also have to extend 15% of loans to the agriculture sector. By July 2024, they also will be required to provide a minimum of 10% of total loans to hydropower.
NEW ZEALAND
Adrian Orr | GRADE: B+
The Reserve Bank of New Zealand cut the official cash rate by 75 basis points in March to a record low 0.25% and committed more than $39 billion to quantitative easing. On August 8, it expanded its QE program to more than $65 billion. The decision-making committee said additional monetary instruments remained in active preparation, including negative interest rates.
Governor Adrian Orr said negative rates could be efficient and effective, but that there were limits to what they could accomplish. “There is a limit to how much depositors are willing to pay to keep their money in the bank,” he said. Other options include foreign asset purchases, forward guidance and term lending, whereby the Reserve Bank would provide commercial banks with low-cost loans for them to on-lend to their customers, Orr suggested.
PAKISTAN
Reza Baqir | GRADE: B
The State Bank of Pakistan has been one of the most aggressive central banks this year, cutting interest rates by 625 basis points since March, when the coronavirus started spreading through the country. Prime Minister Imran Khan lifted a two-month lockdown in early May.
Lockdowns are a “luxury of the rich,” central bank governor Reza Baqir said in early June. “For countries like Pakistan, the trade-off between lives and livelihood is a very real trade-off.” Emerging market countries with high debt have limited policy space to introduce expansionary policies, he added. Baqir said the central bank had injected about $7 billion of liquidity into the economy to support households and businesses. He said the “smart strategy of locking down of hot spots in cities” seemed to be working reasonably well.”
PHILIPPINES
Benjamin Diokno | GRADE: B
The Philippine central bank cut its benchmark interest rate by 50 basis points on June 25 to a record low 2.25%. The cut was the fourth this year, totaling 175 basis points. The central bank eased rules on bank capital and reserves and extended a short-term credit line to the government. Central bank governor Benjamin Diokno said negative interest rates are “out of the question” for the Philippines.
Diokno is serving the unexpired term of late governor Nestor Espenilla, which will end in July 2023. Diokno said in June that inflation would be “benign, not only for this year, but for the next three years.” Prior to 2020, the Philippines had eight years of GDP growth of 6% or better.
SINGAPORE
Ravi Menon | GRADE: B+
The Monetary Authority of Singapore eased its policy in April by setting the policy band for the nominal effective exchange rate on a 0% appreciation path. It said this would prevent a broadening of disinflationary pressures. MAS managing director Ravi Menon said in late July that the emergency measures taken by central banks around the world cannot continue for too long. “We need an exit strategy before this debt accumulates to the point where we have to deal with it for years after,” Menon said.
The MAS, through its daily money market operations, has provided up to $1 billion a day of foreign exchange swaps, a 25% increase from its usual volumes. It also allowed small and medium-size enterprises to defer loan repayments. Mortgage payments were also deferred.
SOUTH KOREA
Lee Ju-yeol | GRADE: A
The Bank of Korea cut its benchmark rate by 50 basis points to 0.75% on March 16 in its largest easing move since the global financial crisis of 2008-2009. In May, when it became apparent that the economy could shrink for the first time in 22 years, the central bank reduced its policy rate to 0.5%, an all-time low.
In July, the government announced a record supplementary budget of $29 billion, bringing its total stimulus to $210 billion. Governor Lee Ju-yeol said the central bank stood ready to increase its purchases of government bonds if local bond yields began to rise with the increased supply in the market. The economy contracted by 2.9% in the second quarter, which was its biggest decline since the fourth quarter of 1998.
SRI LANKA
W.D. Lakshman | GRADE: TOO EARLY TO SAY
W.D. Lakshman, a university professor who lacks central banking experience, was named to head the central bank in December 2019 by the country’s newly elected President Gotabaya Rajapaksa. Lakshman began cutting rates in January and has overseen five cuts in the first seven months of this year.
Lakshman was publicly criticized by the president in July over a delay by the central bank in distributing loans with newly printed money. “About this credit program, the cabinet took certain decisions and the central bank was informed to carry them out,” Lakshman said. “Usually, the monetary board meets and decides on the most appropriate way and implements it,” he added.
Lakshman may have a difficult time standing up to the president, whose brother, Mahinda Rajapaksa, is prime minister as well as finance minister.
TAIWAN
Yang Chin-long | GRADE: A
Taiwan’s central bank cut its policy rate by 25 basis points in March to 1.125% and introduced a $6.8 billion facility with preferential interest rates for lending to small and medium-size enterprises. Taiwan’s economy has held up better than most countries in Asia, as it has had success in containing the coronavirus through early screening and border controls. There is ample liquidity in the banking system, the money market is stable and loan portfolios have continued to grow this year.
Governor Yang Chin-long told parliament in May that there is room for more rate cuts if necessary, but that the central bank would continue to observe other central banks and the epidemic. The central bank has refrained from buying debt securities in light of the fact that bank financing is the most important source of credit in the economy.
THAILAND
Veerathai Santiprabhob | GRADE: B
Moving quickly to counter the effects of the coronavirus, the central bank of Thailand cut its benchmark interest rate by 25 basis points to 1% on February 4. The country was already coping with a severe drought when the virus shut down the tourism industry and weakened exports. The Bank of Thailand cut its rate again in March and in May, bringing it down to a record low 0.5%.
Veerathai Santiprabhob’s term as governor of the bank ended on September 30, 2020 and he declined to apply for a second term. He was replaced on October 1 by Sethaput Suthiwart-Narueput, a member of the central bank’s monetary policy committee, who could face pressure to take unconventional measures to provide additional liquidity and support the economy.
UZBEKISTAN
Mamarizo Nurmuratov | GRADE: C
The central bank of Uzbekistan cut its refinancing rate by 100 basis points to 15% at an emergency meeting on April 14 to combat the effects of the coronavirus and falling oil prices. It kept the rate unchanged through its July meeting, but said it would consider slashing rates later in the year to support the economy. The central bank has also taken steps to defer commercial loan repayments.
Uzbekistan is slowly transitioning to an open economy from a Soviet-style command economy. It overhauled its central banking law in November 2019, giving the institution more independence and strengthening its anti-inflation mandate.
VIETNAM
Le Minh Hung | GRADE: B
The State Bank of Vietnam cut its refinance rate by 100 basis points to 5% in March to bolster the economy. The country’s coronavirus lockdown lasted only three weeks and Vietnam was among the first countries to reopen. The central bank lowered its key rate another 50 basis points in May and said its record $84 billion of foreign currency reserves would enable it to intervene in the FX market if required.
With its growing middle class, Vietnam’s domestic spending accounts for 70% of GDP. The central bank said in July that it could increase credit growth limits or even launch stronger monetary policies to boost growth.
Middle East & Africa
ALGERIA
Rosthom Fadli | GRADE: TOO EARLY TO SAY
Rosthom Fadli became central bank governor on June 23, when his predecessor Aymen Benabderrahmane was named finance minister. Algeria’s economy is struggling due to the decline in the price of oil, which accounts for 95% of export revenues. The Bank of Algeria lowered its main policy rate by 25 basis points to 3.25% on March 15 and lowered the reserve requirement ratio to 8% from 10%. On April 6, the central bank cut solvency, liquidity and nonperforming loan ratios for banks.
Algeria’s president, Abdelmadjid Tebboune, assumed office last December following an election that was boycotted by the pro-democracy movement that pushed out former president Abdelaziz Bouteflika. Tebboune said his government would not seek a loan from the International Monetary Fund. “Accumulating debt harms national sovereignty,” he said.
ANGOLA
José de Lima Massano| GRADE: C+
The Angolan central bank kept its policy rate on hold at 15.5% in the first seven months of this year, saying it was necessary “to continue to try to stabilize prices in our economy.” The inflation rate rose to 22.6% in July. Rather than cutting the basic interest rate as a way to increase credit to the economy, the central bank imposed a fee on excess reserves of commercial banks to incentivize lending.
The central bank has been buying public securities held by non-financial corporations, using a $185 million liquidity line. The country’s net influx of foreign currency declined by 50% from a year earlier through July, and net reserves were reported at $10.2 billion
BAHRAIN
Rasheed Al Maraj | GRADE: B
King Hamad bin Isa Al Khalifa reappointed central bank governor Rasheed Al-Maraj to a fourth five-year term in May. The governor has played an important role in helping to make Bahrain a regional hub for financial technology.
The central bank cut its benchmark interest rate by 75 basis points to 1% in March, following easing moves by the US Federal Reserve. Bahrain’s dinar currency is pegged to the dollar. Meanwhile, the government announced an $11.4 billion relief package, including funds to help businesses keep staff on their payroll. The government’s debt-to-GDP ratio is expected to surpass 100% this year.
BANK OF CENTRAL AFRICAN STATES (BEAC)
Abbas Mahamat Tolli | GRADE: B–
The BEAC serves the six countries of the Central African Economic and Monetary Community (CEMAC): Cameroon, the Central African Republic, Chad, Equatorial Guinea, Gabon and the Republic of Congo. In late March, the bank announced a series of easing measures, including a 25 basis point cut in the policy rate and a 100 basis point reduction in the marginal lending facility rate, to 5%. BEAC doubled the weekly liquidity granted to banks to support the economy, from $400 million to $800 million.
BEAC is driving full interoperability of mobile electronic payment systems in all six CEMAC countries to eliminate the payment of double fees. The system was introduced in July following a six-month trial phase.
BOTSWANA
Moses Pelaelo | GRADE: B+
Botswana was one of the world’s fastest-growing economies before the coronavirus hit. Weak global demand hobbled diamond exports and tourism revenues dried up. The lockdown ended in June, and aid from the International Monetary Fund could help to revive economic growth.
On April 30, the central bank cut its policy rate by 50 basis points to 4.25%. It also lowered the primary reserve requirement from 5% to 2.5%, and reduced the capital adequacy ratio from 15% to 12.5%. The central bank is working with the Finance Ministry to develop a Bank of Botswana law that would strengthen regulation of financial institutions.
CENTRAL BANK OF WEST AFRICAN STATES (BCEAU)
Tiémoko Meyliet Kone | GRADE: B+
BCEAO serves eight member states: Benin, Burkina Faso, Côte d’Ivoire, Guinea Bissau, Mali, Niger, Senegal and Togo. In December 2019, the Economic Community of Western African States declared that the bloc’s currency would be renamed from the CFA franc to the eco, to be overseen by BCEAO. The Francophone countries want to have more control of the currency and to repatriate some of their reserves from France.
BCEAO cut its official rate to 4% from 4.5% in March. In July, it launched a three-month refinancing window, which allows member countries to issue a limited amount of Covid-19 Treasury bills that banks will be able to use as collateral for loans at an interest rate of 2.5%.
DEMOCRATIC REPUBLIC OF CONGO
Déogratias Mutombo Mwana Nyembo | GRADE: C+
The central bank of the DRC lowered its key interest rate from 9% to 7.5% in March, in an attempt to counter the effects of the coronavirus on the economy. However, the country’s currency weakened, and inflation soared as a result of the easier monetary policy.
The central bank shifted course on August 15 and abruptly raised its key rate to 18.5% from 7.5%. The DRC borrows in dollars and spends in Congolese francs, which makes it important to stabilize the currency. Inflation rose to 14% at the end of July.
EGYPT
Tarek Amer | GRADE: A–
Parliament approved a second four-year term in November 2019 for Tarek Amer as governor of the central bank. He oversaw a three-year IMF-backed reform program beginning in 2016 that restored macroeconomic stability to Egypt. In an emergency meeting on March 16, 2020, the central bank responded to the impact of the coronavirus by cutting its overnight deposit rate by 300 basis points to 9.25%. It also said it would postpone the payment of any credit liabilities on individuals and institutions, including mortgages, without any fines for delayed payments.
The IMF approved a $5.2 billion standby arrangement to Egypt on June 26 to address balance-of-payments needs related to the pandemic. The 12-month arrangement aims to protect necessary social and health spending while avoiding an excessive buildup of public debt.
ETHIOPIA
Yinager Dessie | GRADE: C
Governor Yinager Dessie says Ethiopia plans to start setting a central bank benchmark rate and introduce a floating-rate foreign exchange system in three years. The country has foreign currency shortages and double-digit inflation. On May 19, the central bank imposed limits on cash withdrawals and suspended foreclosures for three months. It provided additional liquidity to private banks to facilitate debt restructuring.
Ethiopia received a $2.9 billion three-year IMF program last December to support the country’s reform agenda and catalyze concessional donor financing. In July, Ethiopia began filling the Grand Ethiopian Renaissance Dam, located nine miles from the border with Sudan. The dam has become a source of discord between Ethiopia, Sudan and Egypt.
GAMBIA
Bakary Jammeh | GRADE: C+
Gambia’s central bank cut its policy rate by 50 basis points to 12% in February, saying that it expected inflation to trend lower despite the risks to the domestic food supply in light of a poor harvest and uncertainties about the effects of the coronavirus. The central bank cut the rate another 150 basis points in March and 200 basis points in May, bringing the rate down to 10%. It also lowered the reserve ratio to 13% from 15%.
The International Monetary Fund in April approved a $21 million disbursement to Gambia under the Rapid Credit Facility. The emergency support supplements IMF financing under a $47 million Extended Credit Facility approved in March.
GHANA
Ernest Addison | GRADE: B–
Governor Ernest Addison led a consolidation of Ghana’s banking system, which reduced the number of banks from 35 to 23 last year. As a result of the reforms, Ghana’s banks were better prepared for the recession. In mid-March, the central bank cut its policy rate 150 basis points to 14.5%. It also cut the primary reserve requirement to 8% from 10%, and the capital conservation buffer to 1.5% from 3%.
Nonperforming loans rose to 18.1% in June, with rising defaults from the hospitality and construction sectors. The central bank gave commercial banks more leeway in terms of classifying bad debts.
IRAQ
Mustapha Ghaleb | GRADE: TOO EARLY TO SAY
In a government shake-up in mid-September, Prime Minister Mustafa al-Kadhimi appointed Mustafa Ghaleb as governor of the Central Bank of Iraq, replacing Ali Mohsen Ismail al-Alaq, who led the central bank since September 2014. Al-Kadhimi, who was selected as prime minister in May, reshuffled important economic posts amid widespread protests in Iraq, which relies on oil to fund 97% of the state budget.
The new governor, who was the director of legal affairs at the central bank, met with Judge Faiq Zaidan, president of the Supreme Judicial Council, and in his first press conference since assuming office announced a plan to strengthen the Iraqi dinar and fight money laundering and terrorist financing. He also emphasized the importance of preserving the independence of the central bank. Economic reforms and an end to corruption have been the leading demands of protesters.
ISRAEL
Amir Yaron | GRADE: A–
The Bank of Israel cut its benchmark rate 15 basis points to 0.1% on April 6. Governor Amir Yaron said the bank hoped to avoid negative interest rates, but that he was open to them if the economy continued to weaken. The central bank also expanded its repurchase transactions and said it would provide commercial banks with three-year loans at low interest rates to boost the supply of credit.
The Bank of Israel held its benchmark rate at 0.1% at its July meeting and forecast that the economy would contract by 6% this year. The central bank said it planned to buy $4.4 billion of highly rated corporate bonds in the secondary market and would continue to buy government bonds and to intervene in the foreign exchange market.
JORDAN
Ziad Fariz | GRADE: B–
The Central Bank of Jordan has taken a series of measures to ease the impact of the coronavirus. It cut interest rates, delayed debt payments and encouraged commercial banks to lend to troubled companies. On March 16, it cut its policy rate by 100 basis points to 2.5% and lowered reserve requirements to 5% from 7%.
In May, the government agreed to a $400 million loan from the IMF and was holding discussions with other international financial organizations. Central bank governor Ziad Fariz said the government would have to resort to borrowing and that “Jordan needs years to address the debt resulting from the crisis.” The economy has struggled with high unemployment and sluggish growth in recent years.
KENYA
Patrick Njoroge | GRADE: B+
In late July, as Kenya’s tea and flower exports resumed, central bank governor Patrick Njoroge said the country’s recovery would also be driven by growing remittances from workers abroad and a bumper harvest of corn, the country’s staple.
The central bank lowered its benchmark rate 125 basis points to 7% at the onset of the crisis. It also lowered reserve requirements and permitted commercial banks to restructure distressed loans. An effective communicator, Njoroge told the Treasury in late May to “release cash now” under its credit guarantee scheme for lending to risky borrowers.
KUWAIT
Mohammad Yousef Al-Hashel | GRADE: A
The Central Bank of Kuwait lowered its benchmark rate 25 basis points on March 4 and another 100 basis points on March 16, following rate reductions by the US Federal Reserve. It also asked Kuwaiti banks to postpone loan repayments for private sector companies affected by the coronavirus for three months without interest or penalties. Kuwait plans to issue up to $16 billion in public debt by March 2021, if approved by Parliament.
The central bank amended its governance regulations for commercial banks last September, allowing them to add independent members to their boards. As of June 30, 2020, Kuwaiti banks will be allowed to add two independent members, with another two to be added in June 2022.
LEBANON
Riad Salamé | GRADE: B–
Riad Salameh has served as governor of Banque du Liban for 27 years, maintaining monetary stability through a long series of crises and winning a string of A grades from Global Finance. His record has been stained, however, by recent allegations that he inflated the bank’s assets by more than $6 billion using unorthodox accounting methods. Salame says the central bank’s accounting systems “are not hidden from anyone” and are used by other central banks.
He has been feuding with the former prime minister of Lebanon, Hassan Diab, whose government defaulted on $90 billion of debt in March—over Salameh’s objections. The Hezbollah-led government resigned after the deadly August 4 explosion in Beirut triggered public outrage. Salameh has a court date this month, after a group of Lebanese lawyers formally accused him in July of embezzlement of central bank assets and mismanagement of public funds. Salameh has described the lawsuit as “groundless.”
MADAGASCAR
Henri Rabarijohn | GRADE: TOO EARLY TO SAY
A severe drought and the effects of the coronavirus delivered a powerful blow to the economy of this Indian Ocean island nation of 27 million people. Madagascar produces 80% of the world’s natural vanilla. The country also mines gemstones, cobalt and nickel. The central bank injected $112 million into the banking system in March, but held its benchmark interest rate at 9.5%.
The IMF approved a $166 million disbursement to address the effects of the coronavirus, as the country’s tourism nosedived and mineral trade was disrupted. The government launched an economic stimulus package in June, with $73 million in loans to small farmers and the hospitality industry.
MAURITANIA
Cheikh El Kebir Moulay Taher | GRADE: TOO EARLY TO SAY
Cheikh El Kebir Moulay Taher became governor of the central bank in January, when he switched posts with Ould Dahi, who became minister of economic affairs and development. During his time as governor, Dahi made reforms in the monetary system and strengthened the banking system of this largely desert northwest African country.
In February, the United Arab Emirates allocated $2 billion in soft loans and investments to development projects in Mauritania. The country also received an $87 million, 20-year loan from China with a 2% interest rate to build a new fishing port. In April, the IMF approved a $130 million disbursement to address the coronavirus. In July, the International Finance Corporation provided $35 million as part of a $200 million credit facility for critical energy imports.
MAURITIUS
Harvesh Kumar Seegolam | GRADE: TOO EARLY TO SAY
Harvesh Kumar Seegolam assumed office on March 1, after serving as chief executive of the Financial Services Commission since July 2017. Prior to that, he ran the Financial Services Promotion Agency, which promotes Mauritius as an international financial center. He led the establishment in 2018 of the National Regulatory Sandbox License Committee.
At its meeting in July, the central bank decided to keep its key repo rate unchanged at a record low 1.85%, as it waited for previous cuts in March and April to work their way through the economy. The country’s GDP is projected to decline by 12.5% this year and to grow 7% in 2021. Inflation is expected to remain at 2.5% or less this year and in 2021.
MOROCCO
Abdellatif Jouahri | GRADE: A
Bank al-Maghrib, Morocco’s central bank, cut its policy rate 25 basis points in March to 2% to counter the effects of a drought and the coronavirus. In April, it tripled the supply of funds to commercial banks and expanded the range of bonds and securities it would accept in exchange for refinancing. The Professional Group of Moroccan Banks agreed to allow individuals and businesses to postpone payment of loan installments for three months upon written request.
The central bank cut the policy rate by an additional 50 basis points in June to 1.5% to support the economy. Governor Abdellatif Jouahri said in a statement on July 29 that Morocco’s economic performance was “not enough to meet the increasing social aspirations” of the population, suggesting that more economic stimulus measures, particularly those aimed at micro and small enterprises were likely.
MOZAMBIQUE
Rogério Zandamela | GRADE: C
Last year it was two cyclones and this year the coronavirus that disrupted Mozambique’s economy. In March, the central bank cut the compulsory reserves coefficient 150 basis points to 11.5% for local currencies and to 34.5% for foreign currencies. The central bank cut its policy rate by 100 basis points in April and again in June, bringing the rate to 10.25%.
When Rogerio Zandamela was named governor of the central bank in 2016, he inherited a currency crisis and 20% inflation. The currency was devalued by 50% against the dollar in 2015 after the IMF suspended balance of payments support after discovering that the government held previously undisclosed liabilities. In April 2020, the IMF approved $309 million in emergency assistance to Mozambique to address the pandemic. IMF deputy director Tao Zhang said: “The [Mozambique] authorities are committed to prevent corruption and misuse of emergency financing by strengthening transparency and accountability. In this connection, they will publish large public procurement contracts and conduct and publish ex-post audits of funds’ use.”
NAMIBIA
Johannes Gawaxab | GRADE: TOO EARLY TO SAY
Johannes Gawaxab, former CEO of Old Mutual-Africa, became governor of the central bank on June 3, replacing Ipumbu Shiimi, who was named finance minister. On June 17, the central bank diverged from South Africa’s monetary policy for the first time in two years, cutting its repo rate by 25 basis points to 4%. The South African Reserve Bank lowered its benchmark rate by 50 basis points in May to 3.75%.
Namibia’s currency is pegged to the South African rand. South Africa controlled Namibia from the World War I until 1990. The smaller rate cut in June was designed to curb capital outflows from Namibia to South Africa.
NIGERIA
Godwin Emefiele | GRADE: C
Nigeria’s central bank cut its key interest rate by 100 basis points in May to 12.5%, and governor Godwin Emefiele said, “We must reopen the economy to save livelihoods.” Inflation rose to 12.3% in April and the country’s foreign exchange reserves have fallen significantly. Nigeria relies on oil for 90% of its foreign exchange earnings.
The central bank held its policy rate at 12.5% in July, amid fears that lower rates could pressure the naira currency. Private credit has declined sharply, despite efforts by the central bank to convince commercial banks to boost lending. With rising nonperforming loans, the central bank allowed creditor banks to debit any of a borrower’s bank accounts in Nigeria to repay the loan.
OMAN
Tahir bin Salim Al Amri | GRADE: B
The central bank of Oman lowered the repo rate by 75 basis points in March, moving in tandem with the US Federal Reserve. The Omani rial is pegged to the dollar. With a break-even oil price of about $82 per barrel, Oman faces one of the widest fiscal deficits in the Gulf this year.
The central bank also lowered capital conservation buffers to 1.25% from 2.5% and increased banks’ lending ratio to 92.5%. It allowed a six-month deferral of loan repayments, particularly for small and medium-size enterprises.
The World Bank said significant new gas production in 2021 and diversification into manufacturing, tourism and fishing will lessen the country’s risks.
QATAR
Abdulla Bin Saoud Al-Thani | GRADE: B+
With the Qatari rial pegged to the dollar, the country’s central bank eased its monetary policy in lockstep with the Federal Reserve. On March 4, it cut both its deposit and its repo rates by 50 basis points to 1.5%. On March 16, the central bank cut its lending rate 100 basis points to 2.5% and its deposit rate by 50 basis points to 1%.
Qatar’s banks are well-capitalized and have low levels of nonperforming loans. The central bank has pumped liquidity into the banking system as part of a $20.6 billion support package to offset funding pressures.
The government’s coronavirus containment measures have been eased gradually since May. The country’s borders were reopened to international visitors in August. A rise in natural-gas production and continued investments ahead of World Cup 2022 will help the economy to get back on track.
RWANDA
John Rwangombwa | GRADE: B+
Rwanda’s central bank responded quickly to address the effects of the coronavirus on its fast-growing economy. In March, it cut bank reserve requirements to ease liquidity constraints. In April, the central bank cut its benchmark interest rate by 50 basis points to a record low of 4.5%. It also allowed to commercial banks to restructure outstanding loans for borrowers facing temporary cash-flow challenges arising from the pandemic.
The government announced a $52 million package for local banks to help support funding for business continuity. The World Bank provided $14.25 million of International Development Association credit in immediate funding to the Rwanda Covid-19 Emergency Response Project.
SAUDI ARABIA
Ahmed Alkholifey | GRADE: A–
Saudi Arabia’s economy was hit hard by the effects of the coronavirus and low oil prices. The economy is gradually emerging from a strict lockdown that affected the annual haj pilgrimage. The IMF projected in June that Saudi GDP would decline 6.8% in 2020 and grow by 3.1% in 2021.
The Saudi Arabian Monetary Authority (SAMA) cut its repo rate 50 basis points on March 4 and another 75 basis points March 16 to 1%, following easing moves by the US Federal Reserve. The Saudi currency is pegged to the dollar. SAMA injected $13 billion into the banking system to enhance its lending capacity. It followed up in June with another $13 billion package. The country’s foreign exchange reserves are still comfortable at around $450 billion, after $40 billion in reserves were transferred to the Public Investment Fund in March to enable it to invest at height of the crisis to take advantage of low prices.
SOUTH AFRICA
Lesetja Kganyago | GRADE: B+
The South African Reserve Bank responded aggressively to the coronavirus-driven economic crisis, cutting interest rates five times through July to a record low 3.5% as the economy weakened and kept inflation low. The country’s inflation rate fell to 2.1% in May, the lowest in more than 15 years.
Governor Lesetja Kganyago said the Reserve Bank’s purchases of government debt beginning in March were aimed at reducing the dysfunction in the market and were not quantitative easing. He said the measures the central bank took would be felt only as the economy reopened. Kganyago was reappointed last November to a new five-year term as governor.
TANZANIA
Florens Luoga | GRADE: B–
The Bank of Tanzania cut its discount rate for lending to banks 200 basis points to 5% in May. It also lowered reserve requirements 100 basis points to 6% to provide additional liquidity to banks. The central bank said it would provide regulatory flexibility to banks and other financial institutions for loan restructurings to borrowers experiencing financial difficulties due to the coronavirus. Mobile money operators were allowed to increase their daily transaction limits.
Tanzania’s GDP rose 5.7% in the first quarter, supported by demand for gold. GDP rose 7% in 2019 and the Finance Ministry expects growth to slow to 4% this year and inflation to remain below 10%.
TUNISIA
Marouane el-Abassi | GRADE: C
Tunisia’s central bank raised its benchmark interest rate 100 basis points to 7.75% in February to combat high inflation. It then turned around in March and slashed the rate by 100 basis points, its first cut since 2011, in response to effects of the coronavirus.
Tunisia announced an $850 million package in March to fight the pandemic, including $410 million in loans and aid to help companies. Fitch Ratings said the amounts were small and likely to provide only marginal short-term debt servicing relief to very small borrowers, resulting in little lasting benefit to the banking system. In June, Tunisia received $175 million in budgetary support from the World Bank.
UGANDA
Emmanuel Tumusiime Mutebile | GRADE: C+
The Bank of Uganda cut the central bank rate 100 basis points in April and another 100 basis points in June, bringing the rate down to 7%. After commercial banks failed to reduce their loan rates in response to the central bank’s easing, Governor Emmanuel Tumusiime-Mutebile sent a letter to bank CEOs on July 6 threatening to impose interest rate caps. The average bank lending rate rose from 17.7% in April to 18.8% in July. The Uganda Bankers’ Association said in a statement on its website that commercial banks would begin cutting their rates within 30 days.
Uganda’s economy has been slowed by a locust invasion and flooding as well as the effects of the coronavirus. The World Bank says about 700,000 young people reach working age every year in Uganda, but only 75,000 jobs are created each year.
UNITED ARAB EMIRATES
Abdulhamid Saeed | GRADE: TOO EARLY TO SAY
Abdulhamid Saeed, former group CEO of First Abu Dhabi Bank, was selected as governor of the UAE central bank in April, replacing Mubarak Rashed al-Mansoori, who led the institution since 2014. The new governor emphasized the importance of extending support to private sector companies and individuals affected by the coronavirus. The central bank launched a Targeted Economic Support Scheme (TESS) that provided $2.7 billion in zero-interest funding to banks and more than $16.6 billion in lowered cash-reserve requirements.
In July, the central bank launched an overnight deposit facility, whose interest rate will become the main policy rate and signal the general stance of monetary policy. It said the new facility would help banks in proactively managing their day-to-day liquidity. The main policy rate will be tied to the US Federal Reserve’s rate on excess reserves, which is currently 0.1%. The dirham currency is pegged to the dollar.
ZAMBIA
Christopher Mphanza Mvunga | GRADE: TOO EARLY TO SAY
Zambian President Edgar Lungu abruptly fired central bank governor Denny Kalyalya on August 22 and replaced him with his close friend, former deputy finance minister Mvunga. No official reason for the change was given. The country is in the midst of a debt crisis and is holding talks with the IMF, which stated: “It is imperative that central banks’ operational independence and credibility is maintained, particularly at this critical time when economic stability is threatened by the Covid-19 pandemic.” Kalyalya’s firing came only days after the central bank cut its benchmark lending rate by 125 basis points to 8% to support the struggling economy, which has an inflation rate of about 16%. In May, the bank cut its policy rate by 225 basis points to 9.25%. Zambia, which is Africa’s second-largest copper producer, is expected to experience its first economic contraction in more than 20 years in 2020.
ZIMBABWE
John Mangudya | GRADE: D
At an unscheduled meeting in June, the central bank of Zimbabwe raised its key interest rate 2,000 basis points to 35% “to curb speculative borrowing.” Inflation soared in May to 785% amid shortages of fuel and foreign exchange. The Zimbabwe dollar was pegged to the US dollar at a 1:1 ratio in January 2019, but it was later floated and is now worth 1.5 US cents.
Central bank governor John Mangudya blames the country’s continuing economic woes on a demon that can be felt but not seen. “There is a demon in our economy that needs to be traced,” he told the Budget and Finance Committee of Parliament in May. “It’s more like an economic virus.”
HEAD OF THE CLASS — Earning “A” Grades in 2020
Country |
Central Bank Governor |
Grade |
|---|---|---|
|
Brazil |
Roberto Campos Neto |
A |
|
Chile |
Mario Marcel Cullell |
A |
|
Peru |
Julio Velarde Flores |
A |
|
Bulgaria |
Dimitar Radev |
A |
|
Australia |
Philip Lowe |
A |
|
Malaysia |
Nor Shamsiah Mohd Yunus |
A |
|
Taiwan |
Yang Chin-long |
A |
|
South Korea |
Lee Ju-yeol |
A |
|
Kuwait |
Mohammad Yousef Al-Hashel |
A |
|
Morocco |
Abdellatif Jouahri |
A |
MERIT WINNERS — Central Bankers Earning “A—” Grades in 2020
Country |
Central Bank Governor |
Grade |
|---|---|---|
|
United States |
Jerome Powell |
A– |
|
Honduras |
Willfredo Cerrato |
A– |
|
Paraguay |
José Centero Sienra |
A– |
|
Czech Republic |
Jiří Rusnok |
A– |
|
Georgia |
Koba Gvenetadze |
A– |
|
Iceland |
Ásgeir Jónsson |
A– |
|
Russia |
Elvira Nabiullina |
A– |
|
Egypt |
Tarek Amer |
A– |
|
Israel |
Amir Yaron |
A– |
|
Saudi Arabia |
Ahmed Alkholifey |
A– |
The Americas
Country |
Central Bank Governor |
2020 Grade |
2019 Grade |
|---|---|---|---|
|
Argentina |
Miguel Ángel Pesce |
Too Early To Say |
C** |
|
Bahamas |
John Rolle |
C+ |
B |
|
Bolivia |
Guillermo Aponte Reyes Ortiz |
Too Early To Say |
C** |
|
Brazil |
Roberto Campos Neto |
A |
Too Early To Say |
|
Canada |
Tiff Macklem |
Too Early To Say |
B–** |
|
Chile |
Mario Marcel Cullell |
A |
A– |
|
Colombia |
Juan José Echavarría |
B+ |
B+ |
|
Costa Rica |
Rodrigo Cubero Brealey |
B– |
C+ |
|
Dominican Republic |
Héctor Valdez Albizu |
B+ |
B+ |
|
Eastern Caribbean Central Bank |
Timothy Antoine |
B |
B |
|
Ecuador |
Verónica Artola |
D |
B+ |
|
El Salvador |
Nicolás Alfredo Martínez |
Too Early To Say |
B–** |
|
Guatemala |
Sergio Francisco Recinos Rivera |
B– |
C |
|
Honduras |
Wilfredo Cerrato |
A– |
A |
|
Jamaica |
Richard Byles |
B |
Too Early To Say |
|
Mexico |
Alejandro Díaz León |
B |
A |
|
Nicaragua |
Leonardo Ovidio Reyes Ramirez |
C– |
C |
|
Paraguay |
José Cantero Sienra |
A– |
B |
|
Peru |
Julio Velarde Flores |
A |
B+ |
|
Suriname |
Maurice Roemer |
Too Early to Say |
N/A |
|
Trinidad and Tobago |
Alvin Hilaire |
B– |
C+ |
|
United States |
Jerome Powell |
A– |
Too Early To Say |
|
Uruguay |
Diego Labat (interim) |
Too Early to Say |
A–** |
|
Venezuela |
Calixto Ortega |
F |
F** |
Europe
Country |
Central Bank Governor |
2020 Grade |
2019 Grade |
|---|---|---|---|
|
Belarus |
Pavel Kallaur |
B– |
B+ |
|
Bulgaria |
Dimitar Radev |
A |
A– |
|
Czech Republic |
Jiri Rusnok |
A– |
B+ |
|
Denmark |
Lars Rohde |
B+ |
C |
|
European Union |
Christine Lagarde |
Too Early to Say |
A–** |
|
Georgia |
Koba Gvenetadze |
A– |
A– |
|
Hungary |
György Matolcsy |
B+ |
B |
|
Iceland |
Ásgeir Jónsson |
A– |
A** |
|
Norway |
Øystein Olsen |
C |
B+ |
|
Poland |
Adam Glapinski |
C |
C |
|
Romania |
Mugur Isărescu |
B– |
D |
|
Russia |
Elvira Nabiullina |
A– |
A |
|
Sweden |
Stefan Ingves |
B+ |
B |
|
Switzerland |
Thomas Jordan |
C |
C |
|
Turkey |
Murat Uysal |
D |
Too Early To Say |
|
Ukraine |
Kyrylo Shevchenko |
Too Early To Say |
C** |
|
United Kingdom |
Andrew Bailey |
Too Early To Say |
A–** |
Asia-Pacific
Country |
Central Bank Governor |
2020 Grade |
2019 Grade |
|---|---|---|---|
|
Australia |
Philip Lowe |
A |
A |
|
Azerbaijan |
Elman Rustamov |
B– |
B |
|
Bangladesh |
Fazle Kabir |
C– |
D |
|
Cambodia |
Fazle Kabir |
B |
B+ |
|
China |
Yi Gang |
C+ |
C |
|
Hong Kong |
Eddie Yue |
B+ |
Too Early To Say |
|
India |
Shaktikanta Das |
B– |
Too Early To Say |
|
Indonesia |
Perry Warjivo |
B |
B |
|
Japan |
Haruhiko Kuroda |
B |
B |
|
Kazakhstan |
Erbolat Dosayev |
C |
Too Early To Say |
|
Kyrgyzstan |
Tolkunbek Abdygulov |
C |
C+ |
|
Laos |
Sonexay Sitphaxay |
B |
Too Early To Say |
|
Malaysia |
Nor Shamsiah Mohd Yunus |
A |
B |
|
Mongolia |
Nadmid Bayartsaikhan |
Too Early To Say |
B** |
|
Myanmar |
Kyaw Kayw Maung |
C+ |
C |
|
Nepal |
Chiranjibi Nepal |
Too Early To Say |
C** |
|
New Zealand |
Adrian Orr |
B |
B– |
|
Pakistan |
Reza Baqir |
B |
Too Early To Say |
|
Philippines |
Benjamiin Diokno |
B |
Too Early To Say |
|
Singapore |
Ravi Menon |
B+ |
B+ |
|
South Korea |
Ravi Menon |
A |
A |
|
Sri Lanka |
Indrajit Coomaraswamy |
Too Early to Say |
B** |
|
Taiwan |
Yang Chin-long |
A |
A |
|
Thailand |
Veerathai Santiprabhob |
B |
B |
|
Uzbekistan |
Mamarizo Nurmuratov |
C |
C |
|
Vietnam |
Le Minh Hung |
B |
B+ |
Middle East & Africa
Country |
Central Bank Governor |
2020 Grade |
2019 Grade |
|---|---|---|---|
|
Algeria |
Rosthom Fadli |
Too Early to Say |
Too Early to Say |
|
Angola |
Jose de Lima Massano |
C+ |
Too Early to Say |
|
Bahrain |
Rasheed Al-Maraj |
B |
B– |
|
Bank of Central African States |
Abbas Mahamat Tolli |
B– |
C |
|
Botswana |
Moses Pelaelo |
B+ |
A– |
|
Central Bank of West African States |
Tiémoko Meyliet Kone |
B+ |
B+ |
|
Democratic Republic of Congo |
Déogratias Mutombo Mwana Nyembo |
C+ |
C+ |
|
Egypt |
Tarek Amer |
A– |
A– |
|
Ethiopia |
Yinager Dessie |
C |
B– |
|
Gambia |
Ernest Addison |
C+ |
C |
|
Ghana |
Ernest Addison |
B– |
B |
|
Iraq |
Mustapha Ghaleb |
Too Early To Say |
B+ |
|
Israel |
Amir Yaron |
A– |
Too Early To Say |
|
Jordan |
Ziad Fariz |
B– |
C |
|
Kenya |
Patrick Njoroge |
B+ |
B– |
|
Kuwait |
Mohammad Yousef Al-Hashel |
A |
A |
|
Lebanon |
Riad Salamé |
B– |
A |
|
Madagascar |
Henri Rabarijohn |
Too Early To Say |
B** |
|
Mauritania |
Cheikh El Kebir Moulay Taher |
Too Early To Say |
B–** |
|
Mauritius |
Harvesh Kumar Seegolam |
Too Early To Say |
N/A* |
|
Morocco |
Abdellatif Jouahri |
A |
A |
|
Mozambique |
Rogério Zandamela |
C |
B– |
|
Namibia |
Ipumbu Shiimi |
C+ |
B |
|
Nigeria |
Johannes Gawaxab |
C |
C |
|
Oman |
Tahir bin Salim Al Amri |
B |
B |
|
Qatar |
Abdulla Bin Saoud Al-Thani |
B+ |
A– |
|
Rwanda |
John Rwangombwa |
A– |
B+ |
|
Saudi Arabia |
Ahmed Alkholifey |
A– |
A– |
|
South Africa |
Lesetja Kganyago |
B+ |
B |
|
Tanzania |
Florens Luoga |
B– |
C |
|
Tunisia |
Marouane el-Abassi |
C |
C |
|
Uganda |
Emmanuel Tumusiime-Mutebile |
C+ |
C– |
|
United Arab Emirates |
Abdulhamid Saeed |
Too Early to Say |
B |
|
Zambia |
Christopher Mphanza Mvunga |
Too Early to Say |
N/A |
|
Zimbabwe |
John Mangudya |
D |
D** |
**Applied to a prior CB governor.
Methodology
Global Finance editors, with input from analysts, economists and financial industry sources, graded the world’s leading central bankers on a scale of A to F, with A being the highest grade and F the lowest, based on a series of objective and subjective factors, including the correct implementation of monetary policy for the economic conditions of each country. Judgments were based on performance over the period from July 1, 2019, to June 30, 2020. A governor must have held office for at least one year in order to receive a letter grade.
We applied an algorithm to increase the cohesion of the grades between the different geographical areas, with 100 signifying perfection. The proprietary algorithm includes criteria—such as monetary policy, supervision of banks and the financial system, asset purchase and bond sale programs, accuracy of forecasts, quality of guidance, transparency, independence from political influence, success in meeting specific mandates (which differ from country to country), and reputation at home and internationally—weighted for relative importance.
