Female central bank chief

Israel has appointed its first female central chief. She is Karnit Flug, a former economist at the International Monetary Fund. Like Janet Yellen who was named as the next chairman of the Federal Reserve Board, Flug also was in the center of controversy over discrimination against women and her male competitions were forced to drop out of the race. Jacob Frenkel, the chairman of JPMorgan Chase, was found to have been arrested for theft at the airport in Hong Kong a few years ago. Another male candidate resigned for “personal reasons” only in two days after nomination.

When Israeli Prime Minister Benjamin Netanyahu who said he found a globally renowned figure finally nominated Flug on Sunday, the opposition party showed a rare response. It praised his nomination, saying, “The process was puzzling but he bravely admitted his mistake and made the best decision.” For your information, the opposition party leader Shelly Yachimovich is a woman. What makes it difficult to have a female central bank governor? Out of 177 central banks across the world, 19 countries produced female central bank governors. Among them are the U.S. and Russia.

It is true that there is a limited pool of female candidates and a limited number of economics majors and the role has many requirements which do not allow work-family balance. There is a more important reason, which is unspeakable. “A more troubling explanation is that women may still not be part of the tight-knit clubs from which central bank heads are chosen. Because central banks are independent, it is essential to trust that the chairman’s goals are aligned with the administration’s interests,” says Caroline Freund, a senior fellow at the Peterson Institute for International Economics.

There is a joke that the 2008 global financial crisis would not have happened if it were not “Lehman Brothers” but “Lehman Sisters.” Women tend to be stricter about principles and have strong “ingenuous sense of justice.” Carmen Segarra, a bank examiner, was fired after she pointed out a finding that Goldman Sachs put its interests over those of consumers in 2012. Only 1.8 percent of the executives of 52 financial executives are women while women have strong power only in consumer protection. Will a female central bank governor change the financial market or will women change themselves to become a central bank chief?

Editorial Writer Kim Soon-deok (yuri@donga.com)