Draft Monetary Law Act scrapped
View(s):A proposed bill to repeal the existing Monetary Law Act (MLA) proposed during the previous regime is to be abandoned.
The Central Bank (CB) and Treasury officials told the Business Times on Tuesday that the proposed new MLA was gazetted in 2019, during the last government, but the new government thinks it ‘unnecessary’ to proceed with it.
The proposed MLA was expected to bring about sweeping reforms to the CB, changing it into a more independent body, making the Governor more accountable where he can be called by Parliament, and it was out to make the decision-making of the CB more transparent. It formalised and institutionalised some of the current functions of the CB. The inflation-targeting framework was to replace the current monetary targeting framework to control inflation.
The new Bill proposed to establish three boards – Governing Board, Monetary Policy Board, and Executive Board – with a key change on the appointment of members who are experts primarily in the fields of economics and finance to the Governing and Monetary Policy boards while providing legislative power to protect these Boards and its employees from any influence or interference.
In the draft Bill, the Secretary to Treasury is a member of the Governing Board but not a member of the Monetary Policy Board. “This was a contentious issue in the current set-up,” a Treasury official told the Business Times. But it is now possible to make the Secretary to the Treasury a member of the Monetary Policy Board as an ‘expert’ member.
The Monetary Policy Board was to amalgamate the current Monetary Policy Committee and Monetary Policy Consultative Committee and include four experts in economics or finance in addition to the Governor, Deputy Governors. In addition, the Governing Board was to comprise the Secretary to the Treasury, the Governor, and three members who have expertise in economics, banking, finance, accounting and auditing, law, or risk management. (DEC)