CBI Governance Structure Discussed

CBI Governance Structure Discussed
CBI Governance Structure Discussed

The Expediency Council met on Saturday to discuss the generalities of the central bank's governance, including possible mechanisms for appointing the bank's governor.  

The meeting was chaired by chairman of the council Akbar Hashemi Rafsanjani. Heads of the executive and judicial branches together with the majority of members of the two branches, including the minister of economic affairs and finance, the minister of industry, mine and trade, the CBI governor, and the chairman of the economic committee of the parliament attended the meeting.

This is the second time the council meets to discuss the issue this year. More than three and a half years ago, the Leader assigned the council with the task of examining the CBI governance structure including top appointments in the bank.

Reportedly, those who attended Saturday's meeting came up with three possible solutions as how to revise the current mechanism for appointing a governor for the central bank, according to MNA.              

The first solution suggests appointing the CBI governor through a parliamentary voting process for a pre-determined period of time.

The second solution considers applying the current mechanism to appoint the governor, while making some adjustments in this process. Presently, the President nominates a veteran baniing official as the governor of CBI, who must be verified by the CBI’s general assembly and appointed as per a presidential decree.

The third solution suggests appointing the governor by an independent body that is superior to the three branches and the parliament.

Regarding the term of governance, Gholamreza Mesbahi Moqaddam, a member of the Expediency Council, said that several proposals have been put forth, suggesting that an appointed CBI governor remains in office for three, five, six, or seven years.

Since 1979, nine individuals have been appointed as CBI governor. But the law has not specified a certain period of time for the total chairmanship term. The average global term for the job is six years, as reported by MNA.

According to the report, out of the 47 surveyed countries, the governor of central bank is appointed by the heads of the government in 60 percent of the cases. The parliament appoints the governor in 11 percent of the cases, while in 6 percent of the countries the minister of economy is tasked with nominating the central bank chief. In the remaining six percent of the countries examined in the MNA report, other supervisory agencies appoint the central bank governor.

There are also some other countries that assign two or more bodies to appoint a governor for their central banks, or the Federal Reserve, which is the central bank of the United States.

Details of the decision made by the Expediency Council in their Saturday meeting are going to be discussed in the next meeting of the council.