Private ownership of central banks is not a new phenomenon that is peculiar to formerly socialist economies for the central banks of Belgium, Swiss National Bank, South Africa and Japan (55% government, public float 45%) and Greece (35% state ownership, otherwise private) all have shares that is owned by the public.
In most cases private shareholders are prevented by law to influence monetary tasks of their respective national banks and such structures will not by accepted by policy makers. In Japan for instance, despite 45% of public ownership the Government of Japan reserves the right to vote and retains 100% voting interest.
Private owndership of central banks may sound strange. Even stranger is the stock buying actions of central banks. Through buying stocks and pouring money into the market the central bank aims to keep the currency in check and avert deflationary pressures. As an examples the Bank of Japan (BOJ). The Bank was actively buying shares throughout the long post-Great Recession economic expansion, whereby making a decisive contribution to increased stock prices which would be maintained for unusually long periods of time. In April 2019 BOJ was one of the top ten investors, that held the shares of more than half of the publicly traded companies.
How would ownership structure of Central banks improve the objective of promotion of monetary and financial stability?
Would private ownership of central banks results in a more equal distribution of income?
Dear Mevliyar Er,
Interesting topic. Perhaps there is some correlation to this that has been scientifically verified. I examined the impact of the monetary policy of central banks on the level of financial stability of the financial system, taking into account the improvement of the systemic credit risk management process and the analysis of the sources of the global financial crisis of 2008. In the analysis of the study of the correlation that may exist between the ownership structure and the formation of monetary policy, including the use of monetary policy instruments as elements of an interventionist, anti-crisis, economic policy activating economic growth. In a situation where the central bank is a state-owned company, the issue of the independence of monetary policy in relation to the government's fiscal policy may only be a theory. Of course, the issue of coordinated monetary policy of the central bank with the socio-economic, fiscal, budgetary, etc. policies of the government does not always have to generate errors in the management of state finances and generate destabilization of the financial system and the national economy. It sometimes happens that in the short term, when there is a need to activate economic processes, revive entrepreneurship, in the period of deep economic crisis and economic recession, conducting a coordinated monetary policy of the central bank with the socio-economic, fiscal, budgetary, etc. policies of the government may strengthen the operation of interventionist instruments activation of economic processes and effective pro-development activities in the event of the need to lead the economy out of the crisis. I have been researching this issue. I have published the results of the research in the published scientific articles on the Research Gate portal. I invite you to read the content of these articles and invite you to research cooperation on this subject.
Best regards,
Happy New Year 2021
Dariusz Prokopowicz
Dear Mevliyar Er,
Its very interesting and complex question. It depends on country.
Reducing the impact of government interventions in the work of the central bank
Hi Dr. Mevliyar Er
Let me rephrase it this way. Are central banks really necessary? I think you would find that a majority of top economists ( as an example -Friedman, Mundell ) agree that central banks are neither necessary nor are they so important for economic development of a nation.
lets see 2 each for now.
The central bank of Japan, central bank of Belgium are still private. The central bank of India, central bank of Australia are fully government controlled. One important point is the Fed is still indirectly controlled by the Rothschild family. Looking at these nations and their economic upheavals we can see that it really doesn't matter how these central banks owner ship structures are laid out.
There seems to be no clear-cut answer to question on the ownership structure of the Fed (see the link below)
https://www.usagold.com/cpmforum/who-owns-and-controls-the-federal-reserve/
Governments across the world act as Welfare state too. Equal distribution of income (or reducing income gap among) Population is a stated goal of Welfare state. In fact this goal may not be the objective of Privately owned entities run for profit. Borne out of this reasoning, I feel the answer to the second question could be in negative.