Noyer paints picture of ‘European Federal Reserve System’

European central banks are moving increasingly towards a decentralised model that is "much closer" to that of the Federal Reserve, Christian Noyer, the governor of the Banque de France, said in an interview published today by Central Banking journal.

The changes in Europe are "extremely positive", Noyer said, and are occurring across a range of fields, including research, banking supervision and the Target2 Securities system, which is being jointly built by the Banque de France, Bundesbank, Bank of Italy and Bank of Spain.

"We have been able to maintain a high degree of decentralisation at the European Central Bank (ECB) in terms of relationships with banks and the markets, while boosting statistical tools and economic research capacities at the Banque de France," he said.

The Banque de France has undergone a range of restructuring measures in recent months, including cutting a number of branches and centralising various functions. The central bank also aims to "optimise its positions" by not replacing 50% of retiring agents between now and 2020.

As a result, Noyer described the Banque de France as a "very effective" part of the Eurosystem, comparing the central bank to the New York Fed, which handles the Federal Reserve System's open market operations and remains the most influential of the regional Feds.

A notable difference that remains between the ECB and the Fed, however, is the degree of transparency at each central bank. The Fed publishes detailed minutes of its monetary policy meetings, including the voices of dissent, while the ECB's decision-making process and voting remains opaque.

"Personally, I would prefer no name is ever mentioned or any indication given about the type of decision-making we take," said Noyer. He dismissed fears that votes on the ECB's Governing Council were cast along nationalistic lines: "I can assure you it is not the case, as it is prohibited by treaty."

The full interview, which covers broader topics including whether there is a need for a single resolution mechanism, the role of the Bank for International Settlements, and the handling of the 2008 crisis, is published in the February 2014 edition of Central Banking journal.