“Full independence is crucial if the review is to make the most of this unique opportunity. No institution can be expected to independently or credibly assess itself.
Economists argue that a foreigner should lead the investigation, noting that similar reviews abroad have been led by foreign experts. They include exams from the New Zealand central bank, two exams from the Bank of England, and an exam from the Bank for International Settlements, which acts as the central bank for central banks around the world.
“A foreign perspective would bring valuable external scrutiny to the process and enable benchmarking of the RBA against its foreign counterparts.”
Calls for a review by the RBA, along with other major central banks, have been driven by concerns about monetary policy settings, including historically low interest rates and the use of quantitative easing to protect savings during the COVID-19 pandemic.
In their letter, the economists say the survey’s benchmark must include the RBA Act, which contains its commitment to full employment, the bank’s structure and culture, how it communicates with the public, its membership and board appointments.
Currently, the then treasurer appoints board members without outside review.
Economists also want the statement on the conduct of monetary policy, signed between the Treasurer and the RBA Governor which confirms the bank’s 2-3% inflation target range, to also be part of the review. .
Last week, Chalmers revealed he would delay an official statement until the review is complete.
There was criticism within monetary policy circles over the latest deal, put in place by then-Treasurer Scott Morrison, for including “financial stability” as one of its main objectives. Some monetary policy experts believe the term meant the bank was slower than it should have been in lowering interest rates between 2016 and 2019.
The Treasury is considering three investigative models with the final decision up to Chalmers.
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