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This paper uses a unique survey data set of 105 central banks to investigate whether investment policies for central bank foreign reserve portfolios are linked to the governance arrangements for reserve management. The paper evaluates whether a central bank's investment decision-making structure impacts how much risk institutions take in their reserve management operations and the level of diversity in their reserve portfolios. Additionally, it explores the implications of the broader governance environment on reserve management. The analysis yields four key findings. First, internal governance arrangements matter for foreign reserve portfolio investment policy; the empirical results indicate that reserve portfolios are more diversified in central banks in which the middle office directly reports to the board. Second, controlling for the level of reserves, the macroenvironment, and the broader governance environment, reserve portfolios are more diversified in central banks where the back, middle, and front offices are separated. Third, the regression analysis also reveals that central banks in countries where the Ministry of Finance has an obligation to cover negative equity have fewer eligible currencies and are therefore less diversified. Fourth, central banks where boards actively exercise portfolio oversight usually have portfolios with more risk and diversification. Portfolios with longer investment horizons, more currencies, and a broader set of asset classes have performed better historically while limiting downside risk. Given that the analysis controls the broader governance environment, the data indicate that any central bank can improve its internal governance regardless of the external governance environment. This paper contributes to the literature on central bank foreign reserves management and on understanding the importance of governance arrangements in investment policy.

Central Bank --- Central Bank Governance --- Finance and Financial Sector Development --- Financial Crisis Management and Restructuring --- Financial Structures --- Macroeconomic Management --- Macroeconomics and Economic Growth --- Public Investment Management --- Public Sector Development --- Reserve Management Policy --- Risk Tolerance

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This paper discusses key legal issues in the design of Board Oversight in central banks. Central banks are complex and sophisticated organizations that are challenging to manage. While most economic literature focuses on decision-making in the context of monetary policy formulation, this paper focuses on the Board oversight of central banks—a central feature of sound governance. This form of oversight is the decision-making responsibility through which an internal body of the central bank—the Oversight Board—ensures that the central bank is well-managed. First, the paper will contextualize the role of Board oversight into the broader legal structure for central bank governance by considering this form of oversight as one of the core decision-making responsibilities of central banks. Secondly, the paper will focus on a number of important legal design issues for Board Oversight, by contrasting the current practices of the IMF membership’s 174 central banks with staff’s advisory practice developed over the past 50 years.

Banks and Banking --- Public Finance --- Central Banks and Their Policies --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Taxation, Subsidies, and Revenue: General --- Financial Institutions and Services: Government Policy and Regulation --- Banking --- Public finance & taxation --- Financial services law & regulation --- Central bank legislation --- Legal support in revenue administration --- Central bank governance --- Bank supervision --- Central banks --- Revenue administration --- Central bank organization --- Central bank mandate --- Banks and banking --- Revenue --- State supervision --- United Kingdom

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Safeguards assessments are a key pillar of the risk management arrangements for IMF lending. Safeguards assessments aim to mitigate the risks of misuse of Fund resources and misreporting of program monetary data under Fund arrangements. Safeguards assessment reports are confidential and therefore the IMF Executive Board is provided with a periodic report on safeguards activities on a biennial basis, in addition to high-level summaries in member country staff reports on key findings and recommendations. This update on safeguards activity covers the period May 2017 to end-April 2019 (the period).

Auditing --- Auditing, Internal --- Banking --- Banks and Banking --- Banks and banking --- Banks --- Central bank governance --- Central Banks and Their Policies --- Central banks --- Computer Programs: Other --- Data Collection and Data Estimation Methodology --- Depository Institutions --- Econometrics & economic statistics --- Economic and financial statistics --- Economic indicators --- External audit --- Income economics --- Internal audit --- Labor economics --- Labor Economics: General --- Labor --- Labour --- Macroeconomics --- Management accounting & bookkeeping --- Micro Finance Institutions --- Monetary statistics --- Mortgages --- Public Administration --- Public Finance --- Public financial management (PFM) --- Public Sector Accounting and Audits --- Statistics --- Argentina

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This report by the external expert panel (“the panel”) examines the effectiveness and appropriateness of the safeguards assessments policy in the five years since its last review in 2015. In addition to expressing an opinion on the effectiveness and appropriateness of the safeguards assessment policy, the panel also makes recommendations to the Executive Board for its consideration to improve and optimize the benefits to be garnered from the safeguards assessment policy. The panel’s opinion is based on (i) consultations with key stakeholders, including central bank authorities, IMF Executive Directors’ offices, and Fund staff; (ii) examination of safeguards assessment and other Fund-specific documents; and (iii) study of international reference materials.

Financial institutions. --- Auditing, Analytical review. --- Banking --- Banks and Banking --- Banks and banking --- Central Bank digital currencies --- Central bank governance --- Central Banks and Their Policies --- Central banks --- Communicable diseases --- Covid-19 --- Diseases: Contagious --- Distributed ledgers --- Economics --- Finance: General --- Financial regulation and supervision --- Financial services industry --- Financial services law & regulation --- General Financial Markets: Government Policy and Regulation --- Government and the Monetary System --- Health Behavior --- Health --- Industries: Financial Services --- Infectious & contagious diseases --- Internal controls --- International Financial Reporting Standards --- Monetary economics --- Monetary Policy --- Monetary policy --- Monetary Systems --- Money and Monetary Policy --- Payment Systems --- Political Economy --- Political economy --- Public finance & taxation --- Public Finance --- Regimes --- Revenue administration --- Revenue --- Standards --- State supervision --- Taxation, Subsidies, and Revenue: General --- Technological innovations --- Technology

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This paper argues that nonfinancial risk management is an essential element of good governance of central banks. It provides a funnelled analysis, on the basis of selected literature, by (i) presenting an outline of central bank governance in general; (ii) zooming in on internal governance and organization issues of central banks; (iii) highlighting the main issues with nonfinancial risk management; and (iv) ending with recommendations for future work. It shows how attention for nonfinancial risk management has been growing, and how this has amplified the call for better governance of central banks. It stresses that in the area of nonfinancial risk management there are no crucial differences between commercial and central banks: both have people, processes, procedures, and structures. It highlights policy areas to be explored.

Risk management. --- Banks and banking, Central --- Banker's banks --- Banks, Central --- Central banking --- Central banks --- Banks and banking --- Insurance --- Management --- Management. --- Banks and Banking --- Finance: General --- Public Finance --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Financing Policy --- Financial Risk and Risk Management --- Capital and Ownership Structure --- Value of Firms --- Goodwill --- Central Banks and Their Policies --- Public Administration --- Public Sector Accounting and Audits --- General Financial Markets: Government Policy and Regulation --- Banking --- Financial services law & regulation --- Management accounting & bookkeeping --- Finance --- Operational risk --- Central bank governance --- Internal audit --- Financial sector stability --- Financial regulation and supervision --- Public financial management (PFM) --- Financial sector policy and analysis --- Central bank risk management --- Financial risk management --- Auditing, Internal --- Financial services industry --- United States