The International Monetary Fund (IMF) has reviewed the governance practices of central banks worldwide, To reduce risks of loan misuse and payment default.

The organization with its headquarters in Washington, DC, has released a safeguards assessment policy report as a result of the evaluation by an outside expert panel, which was led by Mohamed Nyaoga, the chairperson of the Central Bank of Kenya (CBK).

The panel concluded that a distinct pillar would enable a more comprehensive picture of governance and elevate the emphasis on board governance, efficacy, and leadership.

The team suggested that each central bank address the governance pillar in accordance with their context, but should concentrate on general principles including autonomy, accountability, disciplined behavior, and ethical conduct.

“We acknowledge that there is ‘no one size fits all’, given that central banks are at various stages of governance sophistication and operate in different legal, political, economic, and cultural contexts,” said Mr Nyaoga.

The group has also proposed that central bank boards be examined on a regular basis, including their makeup, functions, diversity, and suitability, to ensure that any inadequacies are addressed as soon as feasible.

The panel found that risks like as the COVID-19 pandemic, conflicts, climate-related calamities, and cyber disasters necessitate increased attention and, as a result, a larger and more comprehensive risk management effort. Improved safeguards were cited as a role in developments such as central banks in numerous countries launching digital currencies.