Clarke welcomes BOJ's independence todayFriday, April 16, 2021
KINGSTON, Jamaica – Minister of Finance and the Public Service, Dr Nigel Clarke, says he welcomes today's implementation of changes to the Bank of Jamaica Act, 2020, which gives the central bank independence from control by the minister of finance.
Dr Clarke noted that as of today, the BOJ will be operationally independent; with its principal objectives being the maintenance of price stability and financial system stability.
“With effect from Friday, April 16, the minister will no longer have the power to issue directions on monetary policy, and, as such, the Bank of Jamaica will, unambiguously, have operational independence in the implementation of monetary policy,” he noted.
He said that one of the BOJ's new statutory committees, the Monetary Policy Committee, will seek to achieve and maintain price stability, through the achievement of an inflation target set by the minister of finance in consultation with the governor of the BOJ, as required under the Act.
“To ensure transparency and accountability, the notification of the inflation target and minutes of the Monetary Policy Committee meetings will be made public,” he said.
“In accordance with the Act, the oversight capacity of the board has been strengthened and the governance of the BOJ has been made more robust by staggered board appointments, which prevent the entire board from being changed in a single political administration. Instead, a single board vacancy will arise every two years,” he pointed out.
“Furthermore, the Act now prohibits the Government of Jamaica from borrowing from the central bank, except in a declared national emergency by way of an order made by the minister, subject to affirmative resolution, and in keeping with the provisions of the Act,” he added.
He said that the principles of transparency and accountability, which underpin the modernisation and operational independence of the BOJ, are designed to ensure better economic outcomes.
He stated that this institutionalisation of stability reduces risk premia (bonus) and borrowing costs over the long term, as there will be increased certainty about the conduct of monetary policy long into the future.
Dr Clarke said that this will create the conditions for longer term planning, deepening of financial markets, and greater financial inclusion.
Now you can read the Jamaica Observer ePaper anytime, anywhere. The Jamaica Observer ePaper is available to you at home or at work, and is the same edition as the printed copy available at https://bit.ly/epaper-login