Gift receiving at the central bank: Bringing transparency and tightening the rules…

Croaking Cassandra Blog posts on this issue of giving gifts to the central bank. One remembers how during Diwali most of the financial firms competed to give the classiest of gifts to the central bank officials. The idea was to be counted and get to know the regulator and if possible be in the favored books. The practice was stopped some years ago and not sure what the status is of today.

It seems in New Zealand, the central bank has released a list of gifts received since July 2016. The gifts vary from a computer mouse to a jar of pickle to movie tickets and what not.

The blogger says that this should not be acceptable at all even for courtesy sake:

On the gifts list, three banks operating in New Zealand showed up.  The first was BNZ, offering hospitality (twice) to Mark Perry, the Reserve Bank head of financial markets (and a former BNZ employee).   Mark won’t be involved in the supervisory or regulatory side of things.  The second was Bank Baroda, which presented a couple of books, which were passed on to the Reserve Bank library.

The bank that showed up most was ICBC.  It showed up seven times, on each occasion offering gifts to people with a direct involvement in bank regulation.   These ranged from a wall-hanging presented to the Governor by the bank chairman from China (not kept personally by the Governor), through to a box of food, cheese boards given to four staff, three note pads and a wireless mouse, a mobile power pack (again not kept by the individual) at the end of a supervisory meeting, and another wall-hanging presented to the Deputy Governor (not kept by him personally) by “ICBC Mr Wang Lin, Secretary of Party Discipline Committee”.

There was also another gift, accepted by the relevant staff, from a foreign bank at a meeting to discuss a possible application for bank registration.

I am not, repeat not, suggesting that any Reserve Bank official will have directly changed their stance on any matter to do with ICBC because of these fairly small gifts.  But appearances matter, and so does substance.   It is simply inappropriate for Reserve Bank staff to be accepting gifts from banks they regulate, no matter how small those gifts are.  Taken together such small gifts can foster an atmosphere that makes the regulator a little less willing to ask hard questions, or to confront problems, than they might need to be.

The Reserve Bank’s rules need to be tightened up and the banks concerned need to be reminded –  in the Governor’s words –  that these are New Zealand registered banks, no matter which country the bank concerned’s shareholders and owners happen to be based.   Regulators simply shouldn’t be taking gifts from the regulated, not even as a matter of “courtesy”.


Other central banks should also put up their lists over last few years and stop this practice once for all…

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