The Restructuring of the Bank and its Board of Directors*
A.
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Independence
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The Constitution and the Law grant autonomy to the Banco de la
República as central bank of Colombia, which means that the Bank forms part neither of
the branches of the Public Power (Executive, Legislative and Judicial branches), nor of
the regulatory and auditing agencies nor of the electoral power, but rather is a State
entity of a unique nature, gifted with its own organization in consonance with the
functions it must perform. In technical terms, the Bank’s autonomy consists of its
ability to freely analyze monetary phenomenon, design and then apply policy without being
subject to other State pressures.
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Legally, the constitutional hierarchy granted to the Bank permits its
institutional stability and nourishes a healthy constancy in its traditions and criteria,
these being at at a safe remove from outside political developments and influences. Nevertheless,
it is important to note that autonomy does not translate into isolation. It is clear that
monetary, credit and exchange policies must be kept in harmony with the general economic
policy of the Government. To facilitate this coordination, the Minister of Finance is the
presiding member of the Board of Directors of the Bank. Additionally, in the creation of
policy in those areas under its charge, the Board must consult the Government’s
macroeconomic plan. Notwithstanding, the Board must guard against jeopardizing the
fulfillment of its primary assigned goal of preserving price stability in its
consultations and coordination of efforts with the Government. In the case of conflict of
interests, the Bank may refuse to attend to the demands formulated by the Goverment to
cover fiscal shortfalls.
The independence of the monetary authority is a factor of significant importance in
instilling and maintaining credibility in the measures adopted; a credibility that
redounds in an increase in the effectiveness of said measures.
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B.
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Members of the Board of Directors: Prescribed Requisites and Nature
of Appointments
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Law 31 ratified the
constitutional rule that had granted the Board of Directors of the Bank the sole authority
on monetary, exchange and credit matters and confirmed the makeup of the Board of
Directors as consisting of seven members who individually must possess certain definite
qualities and meet specific requirements, including abstaining from a series of proscribed
activities both before the assumption and after the disoccupation of the post, designed to
ensure an elevated level of professional and ethical aptitude among them in tune with
their charge of representing the general interest of the Nation. Law 31, as previously stated, arranged
for the periodic renewal of the Board. With respect to the Chief Executive Officer, he is
elected by the remaining members of the Board for a period of four years and can be
reelected for up to two additional terms.
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C.
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The Stability of the National Currency: the Primary Responsibility of
the Bank
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By constitutional and legal mandate, the primary responsibility of the
Banco de la República is to safeguard the purchasing power of the national currency,
which means, the control of inflation is the primary objective of monetary policy. In this
manner, price stability is recognized as necessary for economic progress and, therefore,
the Bank must make adjustment to the overall growth of currency and credit with the
achievement of this goal in mind. Moreover, Law 31 requires that, at the beginning of
each year, the Board of Directors of the Bank determine inflation the goal, according to
which the economic policy must be planned and executed. |
REFERENCES
El Banco de la
República-Antecedentes, Evolución y Esctructura. (The Banco de la
República - Background, Structure and Development) Banco de la República,
Departamento Editorial, Bogotá, 1990. |
Introducción al Análisis
Económico. El caso colombiano. (Intoduction to Economic Analysis. The Case
of Colombia.) 2a. ed. Revisada, Banco de la República, Ed. Siglo del Hombre Editores,
Santafé de Bogotá, 1997. |
Historia del Banco de la
República 60 años. (History of the Banco de la República: 60 years.)
Fabio Gómez Arrubla, Talleres Gráficos, Banco de la República, Bogotá, 1983. |
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