The word diversity tends to conjure up images of ethnicity, race, gender, and culture. But in reality, the issue is far broader. Diversity cuts across all facets of our lives, and plays a crucial role in helping businesses survive. Research shows that diverse work groups produce greater exchanges of information and more cognitive process. It brings new ideas and experiences and people can learn from each other.
So why should central banks care about diversity? As Mark Carney said in March 2019: “It is the right thing to do: a public institution should reflect the public it serves.” Simple.
Equality, diversity and inclusion (EDI) helps to build the trust central banks need to fulfil their remits. It also leads to better decision-making. Diverse teams can adapt better to change, a resilience which has never been more important in a world where information is abundant and certainty is absent. Never before have central banks had to make decisions in an environment as uncertain as the one we live in today.
Over the last few years, central banks have adopted numerous initiatives to increase levels of EDI; but accomplishing these goals has not been easy and many have fallen short. But there are signs times are changing – in 2014, the BoE launched its inclusion strategy. Central banks in the US, Canada and New Zealand have begun researching in greater detail the indigenous communities they serve, communities which arguably been sidelined ignored. And more recently, the Federal Reserve Bank of San Francisco has launched is ‘Framework for Change’.
In the words of San Fran Fed president Mary Daly: “We must change. Central banks have duty to take action that will result in greater racial and ethnic equity in our organization and the communities they serve. And to do that, diversity must be placed front and centre, now.”
Over the course of 2021, Central Banking will explore some of the challenges faced by central banks and financial regulators alike and also shine a light on some of the great work already underway. In our EDI series, we will speak to policymakers to hear of their own experiences and better understand how central banks are looking to tackle EDI issues head on.