Consultation with experts in monetary policy formulation can be legally addressed: Finance Minister

August 26, Kathmandu.

A clause-by-clause discussion was held on the bill prepared to amend the Nepal Rastra Bank Act, 2058, in the meeting of the Finance Committee.

During the discussion, Finance Minister Dr. Swarnim Wagle stated that extensive consultations have been ongoing with experts and stakeholders during the monetary policy formulation process.

He said that when formulating monetary policy, the research department of the Rastra Bank presents evidence and facts about the state of monetary and the overall economy, and there is a practice of consulting with chief executive officers of banks and financial institutions, as well as subject matter experts and stakeholders.

While such a process of monetary policy formulation could be mentioned in the Act itself, he said it should not be understood in a way that affects the full independence of the Rastra Bank.

‘Just because it’s specified in the Act does not mean that only what the concerned body says will happen in monetary policy formulation,’ he said, ‘Therefore, this issue can be addressed to some extent in the Act.’

Minister Wagle said that while legally incorporating expert consultation in monetary policy formulation is not a major transformative issue, there would be no problem in doing so.

According to him, since the Governor and Deputy Governors of the Rastra Bank are part of the Board of Directors, they have direct involvement in the monetary policy formulation process.

He also stated that there is a practice of seeking opinions from experts in relevant fields on issues such as credit, exchange rates, and balance of payments, as needed.

Minister Wagle mentioned that the International Monetary Fund (IMF), along with Nepal Rastra Bank, also plays a crucial role in monetary policy formulation. He stated that Nepal’s monetary and economic situation is regularly discussed in processes such as Article IV consultations with the IMF.

He also suggested that attention should be paid to including external and independent experts in the Rastra Bank’s Board of Directors. He said that when determining the structure of the Board of Directors, individuals with expertise and experience in monetary economics and who can lead the Rastra Bank in a new direction should be selected.

‘Necessary reforms can be made to the structure of the Board of Directors by looking at the expertise and experience of external experts,’ said Minister Wagle, ‘A place can be made there to include individuals with real expertise and experience in the monetary sector.’

For More: Monetary Policy Formulation Experts