Central Banks

Swiss-style secrecy not an option for bank chiefs

PUBLISHED : Sunday, 10 January, 1999, 12:00am
UPDATED : Sunday, 10 January, 1999, 12:00am


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IN BASLE, Switzerland, there is a long tradition of banking secrecy. It has become seen as a vital characteristic of the banks that they can offer their customers total confidentiality.

For the Bank for International Settlements (BIS), known as the central bank of central banks, such a lack of scrutiny and accountability must seem perfectly natural.

Hong Kong is a different city. As its local representative recognises, keeping a low profile is not an acceptable option. The local media will not lightly accept that 17 of the most influential people in world financial systems are going to turn up for a cosy chat and not have to explain why they are here or what they are going to talk about.

It is an adage that you should not have a meeting unless you are ready to make a decision. The waffling and fact-finding can go on at a lower level, saving the time of those senior officials for the real decision-making.

So what are the governors of 11 regional banks, the United States, Europe, South America and Saudi Arabia going to spend their time talking about? To make it worth the time flying to Hong Kong, you would hope they would take home more than a suit from Sam the Tailor.

Is there really any reason why the citizens of these nations cannot be told more about what their central bank governors are discussing? The BIS says that by not having a fixed agenda and the need to produce an agreement, the governors can talk frankly on any topic they feel is important, and do not need to come to an agreement.

But if they can reach no agreements whatsoever, then the meeting is a waste of time. Telling the public what they are talking about does not make it impossible for the governors to be frank. And spontaneous changes to the agenda need not be ruled out by having some guidelines in advance.

A key element in strengthening financial institutions in the region has been increasing the transparency of those institutions. Surely, the central banks should be prepared to lead the way with greater openness in their machinations? Instead, they have been as tight-lipped as the mouthless Hello Kitty. The BIS claims it has imposed no code of silence on the bankers, so it should be possible for them to arrange their own private meetings. On a two or three-day stay in Hong Kong (some officials began arriving yesterday) central bankers ought to have enough time to meet local politicians, business people and financial experts.

But at least one central banker has turned down a meeting with Chief Executive Tung Chee-hwa. Wim Duisenberg, arriving one week after the launch of the euro, will not be promoting the currency which gives his institution - the European Central Bank - its raison d'etre, nor will he even find time to meet the European Union's local representative.

However, today should be perfect weather for a round of golf.