G20: Central Bank mandates by goal 2000-2020

Central Banks are the central public monetary institution of a country or region, tasked with managing the currency and monetary policy of the state, as well as overseeing the financial system of the area under its supervision. In most of the largest economies of the world, gathered together formally as the Group of 20 (G20), the central bank is an independent institution with legally mandated goals which it must abide by. This means that central banks should, in theory at least, be independent of political control and pursue their mandated goals without being influenced by political concerns, such as pursuing wage growth in order to win votes for the incumbent government. Central banks have mostly been made legally independent since the 1980s, in an effort to allow central bank technocrats to take measures to control inflation, without needing popular political support. With the failures of many central bankers to foresee or prevent the 2008 Global Financial Crisis, however, central banks have come under increasing pressure to incorporate wider concerns into their mandates, with some questioning whether a central bank can ever be truly 'independent'.

The goals of central banking

For the majority of these central banks, price stability is the goal of their mandates. Price stability is the goal of maintaining price increases to a manageable level which is conducive of stable economic activity. This usually manifests itself as a goal of keeping inflation to around two percent per year. Since the 2008 Global Financial Crisis, there has been a widening of some of these central banks' mandates to include financial stability. This action was often taken in reaction to the perception that many central banks became complacent about the growth of the financial sector during the period known as 'the Great Moderation' (1980s-2007), which led to the bank failures and subsequent bailouts of the crisis. Some experts have recently called for central banks to include climate change related goals in their mandates, with an aim to promote 'green central banking' and the growth of a sustainable finance industry. As of 2020 no central bank of the G20 countries has adopted such a goal in their mandates.