Abstract
Although the title seems to be a contradictio in terminis, this paper identifies a small, eclectic number of central banks with private shareholders about which little has been published. It is shown that only the central banks of Belgium, Greece, Italy, Japan, South Africa, Switzerland, Turkey and the United States (US) Federal Reserve allow shareholding other than by the government of the respective countries, although not in all instances by the general public. This paper considers private shareholding in this eclectic group of central banks, despite the trend of nationalising central banks that commenced in 1935. Private shareholding is defined as shareholding in a central bank by any party other than the respective government or governments (e.g. the European Central Bank) where the central bank is located. Large differences in the classes of shareholders of these eclectic central banks and differences in their approaches to dividend payments are highlighted in the paper. The conclusions reached are, firstly, that investment only in the shares of the central banks of Belgium and Greece (albeit only for residents in the latter instance) can be regarded as growth investments. Secondly, shareholding in the Italian central bank has been used to recapitalise ailing commercial banks. Thirdly, shareholders play no role in the formulation and implementation of monetary policy. Lastly, the shareholding structure of these banks contributes to improved governance in the case of the central banks of Belgium, Greece, Italy, South Africa, Switzerland and Turkey, but no evidence can be found that central banks with shareholders in any way outperform central banks without shareholders.
Highlights
The title of this paper seems to be somewhat of a contradictio in terminis, as it gives rise to the question whether there are central banks with private shareholders
In the case of the South African Reserve Bank, the questionnaire was completed by Rossouw, author of his paper and one of the authors of Rossouw and Breytenbach (2011a; 2011b), who served as Secretary of the Bank on two occasions
The central banks with shareholders can be classified as follows in terms of the classification by De Kock (1939:298) highlighted above: 8) All shares held by private shareholders: Greece and South Africa
Summary
The title of this paper seems to be somewhat of a contradictio in terminis, as it gives rise to the question whether there are central banks with private shareholders. Private shareholding is defined as shareholding in a central bank by any party other than the respective government or governments (e.g. the European Central Bank) where the central bank is located. This paper reviews this eclectic group of central banks about which surprisingly little has been published. Central banks with private shareholders identified from the available literature were approached with a request to complete questionnaires on their shareholding structures. The remainder of the paper is organised as follows: Section 2 reviews the literature on central banks with private shareholding.
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