The demand for better gender balance at the head of leading central banks including the ECB should matter to everyone. More women, means potentially more policies orientated around people and the environment.
International Women’s Day in 2018 is a timely reminder that there is still more work to be done in improving gender balance at leading central banks. A report by Official Monetary and Financial Institutions Forum (OMFIF) from 2017 focused on central banks, shows that there is a high level of imbalance between men and women in the sector. The report calculates an index value which stands at 30.6% in 2017 – a shockingly low figure. The ECB is not immune from this imbalance as the proportion of women in management positions is below the global index, at 27%.
Positive Money Europe supports the view that gender diversity in leadership is important given the implications for how institutional decisions are made. Balanced teams are likely to be informed by a more varied set of views which is important especially when it comes to the financial sector. For example, a more comprehensive approach to monetary policy can be expected from a central bank committee that benefits from a variety of perspectives. Improving gender balance is one mechanism that can offer this, as academic studies in behavioural economics highlight men and women’s different attitudes to economic policies.
This is not to say an organisation’s success is derived solely from having more women on the board. Instead, better gender balance expands the range of available views, which serves to enhance the decision-making process.
Donna Ginther, a professor at the University of Kansas, said in an interview that the gender imbalance should matter “because women have a different perspective on the economy… so if the decision makers are all dealing with the abstract, they may not understand the human cost of some of their choices, for example.”
The lack of gender balance in the ECB has been a topic of constant pressure by the European Parliament over the last years. In 2012, the Parliament deliberately delayed the appointment of Yves Mersch to the ECB’s executive board in protest at the ‘systemic bias’ against women in institutional appointments.
Although Mr Mersch’s appointment was eventually confirmed, the Parliament’s pressure had an impact. The ECB subsequently introduced gender targets in 2013 with the aim of raising the share of women in management positions to 35% by 2019. Since, the ECB has successfully lifted this number to 27%, compared with an interim target of 29%. However for the most senior management roles the share was only 17% against an interim target of 24%.
This is good progress but not enough, and we are pleased to see that Mario Draghi recognised this. “We’ve got to do some work here,” he said today at the ECB’s press conference. The ECB has announced it will take additional measures to improve its recruitment procedures. In particular, the ECB will feature more women on recruiting panels because “often there are unconscious biases that play a role,” Draghi said.
The ECB’s announcement appears to be a promising commitment in redressing the gender imbalance at the central bank. We will continue to push the ECB for better representation in terms of gender, ethnicity, political views and backgrounds as the more diverse the ECB board is, the more perspectives it will benefit from.
Among others, this is one important reason why we are campaigning to revamp the appointment process of ECB leaders. A more open process with greater involvement from the European Parliament would lead to greater consideration for gender balance. Our work in this area mirrors Positive Money UK’s campaign to improve gender balance and diversity at the Bank of England. Central banks with a better gender balance and representation means better decision making.