Now that the term of the current Bangko Sentral ng Pilipinas governor is drawing to a close, it is being suggested that the next governor should be a BSP insider. An insider would be a preferable option, it is being argued, because there would be no long learning curve for a governor-elect who is from the BSP’s ranks because that person would already be well-versed in BSP regulations and operational practices and would, in addition, be very familiar with the institutional culture of the nation’s monetary policymaking institution.
The part of the pro-insider argument that relates to the learning curve is a no-brainer. Of course, any organization facing a leadership transition has to take into consideration the reciprocal relationship between knowledgeability and length of time in a position; overnight experts are very much the exception rather than the rule. An individual who has been a deputy governor or managing director for twenty or more years will definitely make possible a seamless transition after July, when the current governor’s term expires. By contrast, the appointment of someone from outside the BSP – say, from academe, the business community or the commercial banking system – will entail a lot of ropes-learning.
Undoubtedly, the incoming governor of the national monetary authority needs to be sufficiently knowledgeable about the nuts and bolts of the governorship, viz., the processes of the New Central Bank Act, the structure and powers of the Monetary Board, the structure of the financial system, the regulatory tools available to the MB and the statutory relationship between BSP and the Department of Finance. I think, however, that the incoming BSP chief needs to be more than a repository of knowledge of technical and operational data.
Indeed, I venture to say that there are two kinds of central bank governor. One kind is the technically proficient governor with gravitas. The other kind is the technically proficient governor who is without gravitas.
What is gravitas? Webster’s and Oxford Dictionaries have definitions of this Latin word, but I prefer to define gravitas in terms of the personas and professional standings of two governors that I had the good fortune to observe at close range. Truth to tell, gravitas is not easy to describe: you just know when you are in its midst.
One knew that one was in the presence of gravitas when one was in the company of the first governor of the Central Bank of the Philippines, Miguel Cuaderno. Appointed by President Elpidio Quirino at a time of impending economic crisis – in the years immediately following World War II this country was rapidly running through whatever foreign exchange it had – Miguel Cuaderno lost no time preparing the Central Bank to prepare and administer a structure of import and foreign exchange controls. Elected as the delegate of Bataan to the 1934-1935 Constitutional Convention, Miguel Cuaderno was named one of the “Seven Wise Men of the Convention.” A lawyer by training, Cuaderno took a postgraduate course at the renowned London School of Economics and Political Science.
It was a pleasure being in Miguel Cuaderno’s company. A sharp lawyer with an equally sharp interest in sartorial elegance (He had his suits tailored in London’s Saville Row), the first governor spoke good Spanish and was highly knowledgeable about politics—especially Quezonian politics—history, art, culture and, of course, law. When you were with Miguel Cuaderno, you knew you were in the presence of gravitas.
Being in the company of the sixth governor of the Central Bank of the Philippines, Jose Fernandez Jr. was no different. One knew that one was in the presence of a great mind. Jobo—the nickname by which he came to be known —Fernandez was fortunate enough to have been a member of a family that could afford to send him to the Ateneo de Manila and Harvard Business School (from which he graduated cum laude). No one doubted that he would quickly rise to the top of Philippine Bank of Commerce, which he joined upon his return to Manila. Jobo Fernandez did not wait for that day to come; he chose to establish Far East Bank and Trust Co., of which he became the president and CEO.
Having come from the ranks of the commercial-bank presidents, Jose Fernandez Jr. knew everything that an incoming governor had to know about central bank policies and procedures and programs. But he was also knowledgeable about a lot of other things. He was as comfortable talking about French wine, Russian history and Baroque architecture as he was discussing reserve requirements, overnight lending rates and foreign exchange reserves. Like Miguel Cuaderno, Jobo Fernandez was a man of eclectic knowledge and eclectic tastes. It was a delight to be in their midst.
I am not for a moment suggesting that the individuals whose names are being proposed for the governorship lack the competence to run this country’s monetary establishment. Not at all. The incoming governor needs to be proficient in the techniques and procedures of monetary policymaking. What I am suggesting is that a central bank governor must be a person possessed of a world view and of broad knowledge.
In other words, the ideal central bank governor, who is seen and listened to here as well as abroad, is a person who possesses gravitas.
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