This year has been an interesting time to be a central banker. With the US dollar taking a tumble against almost all other currencies, the world’s central bankers have had to take a long hard look at their exposure to the dollar. As Global Finance went to press, signs were emerging that the central bankers were fighting shy of US treasuries—something that observers have long predicted would happen (see Milestone, page 12). The world’s reserve currency has been through some choppy times with the Bush administration officially endorsing the former administration’s strong dollar policy while quietly letting the currency slide.
They have also had to keep a keen eye on oil prices, which went on a wild ride through the summer. In many countries, the increased oil prices caused a spike in inflation, leaving bankers to decide if they should act to trim inflation —and risk over-reacting. In the end, many seemed to be shrugging off the potential impact of rising oil prices, provoking some consternation among observers.
It’s likely that they were looking at the general economic conditions, both in their own countries and across the world, and concluding that they should hold their fire. Most central bankers have benefited from the gentle—and general—improvement in the world’s major economies. Certainly few have had any major crises to deal with and, being a competent bunch, they’ve mostly handled the minor upheavals of the past year without too much fuss.
While most have maintained fairly consistent performance since last year, a few central bankers stand out for their improved handling of their countries’ economies. One is Switzerland’s Jean-Pierre Roth, who finally seems to have grasped the nettle and taken control at the central bank. His grade leaps from a D to a B in recognition of his startling turnaround. Canada’s David Dodge inches up half a grade as he, too, seems to be getting the measure of the job after a fitful start. Another central banker who flunked out last year is Alan Greenspan. This year he scrapes a C on the basis that he’s done a reasonable job in what remain difficult circumstances. Expect to see Greenspan’s grade improve next year, though, as his most recent performances have been more reminiscent of the market guru of old.
Again this year, the general level of competence among the world’s central bankers seems to have increased noticeably. That can only be a good thing for the world’s economies.
