A tale of appointment of two Central Banking heads

Top posts in the central banks of India and US would go vacant after the incumbent chairmen’s retire.

Appointment of US Fed Chairperson has narrowed down to two choices, regional Fed chairperson Janet Yellen and former treasury secretary Larry Summers.

Janet Yellen with her considerable central banking experience and work experience as an economist is clearly the front runner.  

Larry Summers, the former treasury secretary, would be posing formidable challenge to her. However, he alongside Alan Greenspan had a role in repeal of the Glass – Steagall Act, which essentially eased rules for commercial banks allowing them to indulge in risk – taking behaviour , which eventually led to the credit crises in the US, could pose a hindrance.

Nicholas Wapshott has this interesting piece in FE http://www.financialexpress.com/news/column-fed-s-next-chief/1149346 

Ezra Klein of Bloomberg has this to say http://www.bloomberg.com/news/2013-08-01/six-of-janet-yellen-or-half-dozen-of-larry-summers-.html  .

Appointment to this top post has generated a great deal of political heat with recent indications that the government is favour of Summers. Theres even the gender angle being talked about which is inappropriate as it shouldnt really matter and the best person for the job should get it. Senators, are however, favouring Yellen, just to keep Summers out.

Back home, Arvind Mayaram (Econ Affairs secretary & Rajasthan cadre bureaucrat), and Raghuram Rajan (Economist and current chief econ advisor to the PM) & Saumitra Chaudhari (Member, Planning Commission) are the frontrunners. Past trends indicate that a career bureaucrat or economist with global exposure is chosen to head the Reserve Bank.

Considering the importance of the post, MidnightBreakfast feels it should ideally be a person who has central banking experience, can take politically unpopular decisions, withstand the media onslaught (print and television) and not to get unduly swayed by them during the periodic monetary policy reviews.  


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