Women Controlling Consumer Spending Sparse Among Central Bankers
Wednesday, September 7, 2011
(Bloomberg) -- In the early 19th century,
an investor known as the Widow Borski acquired almost half the shares of the Netherlands’
new central bank to assist a nation strapped by the Napoleonic wars.
Two centuries later, women -- who control
more than $20 trillion or about 70 percent of global consumer spending --
account for only about a tenth of the voting power on the world’s key interest
rates. Past and present female central bankers say this should change.
They argue that greater representation
for their gender may provide broader insight into economic behavior and even
promote more financial stability. One academic study in 2000 found that women
who served on the Federal Reserve’s Open Market Committee from 1966 to 1996
were among the most "ease-oriented” officials and that increasing female
involvement "could have an important effect on policy outcomes.”
If "it’s all men, then you are excluding
quite a wide range of opinion,” said DeAnne Julius, a former Bank of England policy maker and now
chairman of London-based Chatham House, an international research group. "Women
have different social networks, shop in different places. This makes for a more
diverse representation of experience and interests.”
Among officials who publicly vote on
monetary policy in the Group of 20 leading economies, only about 10 percent are
women. Females head the central banks of Argentina, South Africa, Malaysia,
Honduras, Botswana and the Bahamas, and currently form a majority of governors
at the Fed.
Recent turnover at the European Central
Bank and Bank of England has left their policies in all-male hands. There also
aren’t any women now among the officials who dictate interest rates for
Australia, Brazil, Indonesia, India, Mexico and Turkey.
Even though a greater balance may be
achieved as more women enter economics and banking, Julius says governments may
need to follow Kenya and Japan by introducing quotas. Kenya’s central- bank act
mandates that two of its four external committee members be women, bringing
their share of the interest-rate vote to 25 percent. Since 1998, the Bank of
Japan has reserved one of its nine policy-board spots for women.
"While I’m not generally in favor of
quotas, when things don’t happen naturally a quota can drive change,” said
Julius. "It forces policy makers to think about why there aren’t more women
The women who drive 70 percent of total
consumer spending decide how their families use financial services, insurance
and health care, according to a Boston Consulting Group poll of 23,000 women in
Chief Household Officer
"Women are their household’s chief
financial officer,” said Michael Silverstein, a Chicago-based senior partner and managing
director at BCG and co-author of "Women Want More,” a 2009 book about the ways
companies can capitalize on female consumers. The book estimates that by 2014,
women could earn about $18 trillion a year and control as much as $28 trillion
Fed Governor Elizabeth
A. Duke cited surveys in a May 2010
speech that show women account for 80 percent of all consumer- expenditure
decisions in the U.S., making 93 percent of food purchases and 65 percent of
"Because women engage in more of the
family shopping, they are consistently aware of price changes and inflation,”
Duke said. "Women running households know just what it takes to make the budget
Women may bring other skills to decisions
about interest rates, said Anne Sibert, who sits on the board of Iceland’s central bank.
Men may be "more risk-loving and overconfident,” she said.
‘More Aggressive Stance’
"Men have a more aggressive stance, which
is sometimes destructive and can pull things apart,” Sheila
M’Mbijjewe, a member of the Central Bank of
Kenya’s Monetary Policy Committee, said in an interview. "In the financial
world, the requirements for stability and predictability cannot be
over-emphasized, and women can bring that.”
Her argument is reflected in studies by John
Coates, a former derivatives trader at
Deutsche Bank AG. His work suggests that some differences in risk-tasking may
be explained by women producing about 10 percent of the testosterone of an
average man in his 20s.
Only 2 percent to 3 percent of the
traders at the investment banks he studied were women, while about 60 percent
of the asset managers, who have more time to analyze the risks they’re taking,
were female, according to Coates, who is now a senior research fellow in
neuroscience and finance at the University of Cambridge in England.
The 2000 academic paper on the Fed’s
decision-making process found that in the three decades until 1996, six of the
seven women who served on the rate-setting FOMC were among the 13 policy makers
most inclined toward lower interest rates.
While the small sample prevented
economics professors Henry Chappell of the University of South Carolina and Rob
Roy McGregor at the University of North Carolina
from making more than speculative conclusions, they said the results suggest
that "greater representation of women in the Fed’s monetary-policy- decision
process could have an important effect on policy outcomes.”
Three women sit on the Fed’s 10-member
FOMC and on its board, which currently has five members and two vacancies:
Duke, who was previously chief operating officer of Virginia-based TowneBank; Sarah
Bloom Raskin, the former Maryland commissioner
of financial regulation; and Vice Chairman Janet Yellen, who chaired the Council of Economic Advisers under
President Bill Clinton and
ran the Federal Reserve Bank of San Francisco.
Central Bank Chiefs
In Argentina, Mercedes
Marco del Pont, former president of
state-owned Banco de la Nacion Argentina, has headed the central bank since
February 2010.Gill Marcus, past
chairwoman of Barclays Plc’s Absa Group Ltd., became South Africa’s central
bank governor in November 2009.
Outside of the G-20, Zeti
Akhtar Aziz runs Malaysia’s central bank, Maria
Elena Mondragon is the president in
Honduras. Wendy Craigg is
chief in the Bahamas and Linah Mohohlo in Botswana.
Emerging markets are "much more concerned
about growing our societies,” said Marcus, who remembers turning up for
meetings of international counterparts to find she’d been placed on the list of
officials’ spouses. "Advanced economies are much more established in their ways
of doing things.”
Only two women -- Gertrude
Tumpel-Gugerell and Sirkka
Haemaelaeinen -- have had any say in the ECB’s rates since the euro began trading in
1999. Men account for 27 of the 31 officials who have voted on monetary policy
at the Bank of England since it gained independence in 1997.
Women may need to take more initiative,
said Joanne Kellermann,
executive director at the Netherlands’ central bank. Her institution has
particular reason to hail women after being bankrolled in the early 1800s by Johanna Pieters Borski. The widow of a wealthy merchant of rice and grains,
Borski helped King Willem I by buying 2,000 of the central bank’s initial 5,000
shares, attracting other investors and making a profit.
While the Dutch central bank is on course
to have women in a third of management jobs, Kellermann said she intervened
last year to add a woman to the short list for one posting.
"Many women are inclined by nature to
wait until the organization notices their management potential,” Kellermann
told an ECB forum on diversity in March. "They only apply for a position if
they comfortably meet all the job requirements.”
While lawmakers in the U.K. have called
for more women to consider joining the Bank of England’s rate-setting committee,
there was only one woman among the 27 candidates when a position became
available this year. The previous opening attracted resumes of 34 men and four
‘Wish We’d Had More Women’
"I really wish we’d had more women, and I
can think of women who I think would be good,” Kate
Barker, the longest- serving female on the
U.K.’s Monetary Policy Committee, said in a June interview.
She never detected prejudice or felt she
was being "belittled,” said Barker, who served from 2001 to 2010 and is now a senior
adviser to Credit Suisse Group AG. "It’s just odd to spend the whole day in a
room with 13 blokes; it’s not the way the world is,” she said. "You’ve always
got to be on the alert that you’re getting equal weight and equal treatment.”
Part of the problem may lie in the lack
of women with relevant qualifications and technical skills, said Iceland’s
Sibert, who also teaches economics at Birkbeck University in London. Women who
have the experience to be policy makers today faced "overt” discrimination in
their early careers that would shock their younger counterparts, she said.
"Macroeconomics has been traditionally a
male-dominated field, and once something is male-dominated, it tends to remain
so,” she said. "It promotes aggressive behavior. It can be quite difficult for
women to overcome.”
At the Massachusetts Institute of
Technology in Cambridge
-- where Fed Chairman Ben
S. Bernanke and Bank of England Governor Mervyn
King taught -- only 16 percent of
undergraduate and graduate students studying economics in 1980 were women,
compared with 40 percent this year. The highest ranked woman on the RePEc
online database of economic citations as of June was the University of
Maryland’s Carmen Reinhart, at
Data suggest a similar discrepancy exists
in financial services. Research by the London-based Financial News showed in
March that less than 5 percent of the most-senior executives at investment
banks are female.
That creates a "pipeline problem” that
may be fixed as more women study economics and enter banking, said Susan
Phillips, 67, a former Fed policy maker who
served as dean of the business school at George Washington University in
Washington until last year.
Phillips remembers a meeting of central
bankers in Basel, Switzerland, at which then-ECB President Wim
Duisenberg opened the talks by welcoming
"gentlemen and Miss Phillips.”
"It’s going to change, but it’ll take
time,” she said.
O’Donnell and Simon Kennedy | July 24, 2011 07:01PM ET
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