Participation of central banks in international development cooperation brings back positive effects. When we speak about (international) development cooperation, we often discuss why public sector institutions would be willing to share their financial and human resources in order to support other institutions' and countries' efforts and reforms. When it comes to central banks, which are not part of the public sector as such, this becomes even more complex. Afterall, they follow mandates that are within their national boundaries – be it concerning either monetary policy, financial stability, banking supervision, development of financial market infrastructure or other.

In the global financial crisis, it has once again become evident how connected the economies and financial sectors are in the world. It has also shown us how policies to avert it or to restore the pre-crisis economy levels in one country can have negative spillover effects in another. In a way, it is in best interest of a central bank that there is macroeconomic and financial stability also in their neighbourhood. This might indeed be one of the stronger arguments why they should cooperate and share their expertise with others. Although however, there are some counterarguments for this, especially because of the said spillover effects .

However, the motive of this post is to reflect how important it is to be present internationally, how it might benefit the central banks, and what is the role of the CEF.

We observe that some institutions or some departments within institutions have a strong opinion on why they are active in IDC. They see that being active through technical cooperation, it allows them to continue to develop themselves and stay on top of things. They also see they can profit from international recognition of their expertise.

Sometimes it is a challenging task for us to explain to an expert why it is good they share their knowledge with other institutions, although this might not be part of their job and it represents an additional burden.

 

However, it always reminds of an interesting conversation that I had with a representative of a central bank whose department was relatively small while stretched among so many different internal and external activities. In such situation, we are sometimes told the employees do not have the time to take part in our events – not as participants nor as lecturing experts. It was however refreshing to see that, despite their constraints, they were not trying to limit their external cooperation. On the contrary, he was very much interested to cooperate with us: »Being a small department and with limited number of staff, we needed to optimize our processes. Having succeeded to do so, we became very good in what we do and developed a unique practice and experience.«

They were happy to share their knowledge with others that might be dealing with similar challenges. In addition, when sharing their knowledge in international fora, they also listen from others and actively reflect on and challenge solutions, which makes them feel they stay on top of all the novelties in their area of expertise. »If we are not taking part, we are not pushed to learn and we do not progress.«

Through this presence they have also gained visibility and expert status. Other institutions are well aware of the knowledge they are bringing in and this gives them greater credibility when voicing their opinion. »When we then raise our voice, other institutions pay attention and our voice is much stronger, regardless of the fact that we are a small institution.« Their expertise and its visibility makes their arguments stronger and it is more likely they are taken into account when decisions are made. It is their soft power in international community. And what can be more legitimate power than knowledge?

This is an important aspect that we can learn why development cooperation in terms of knowledge and experience sharing is so important for the institutions. Especially taking into account that many central banks in the region are relatively smaller and have weaker presence internationally.

This is one of the aspects that the CEF is striving to support constituent institutions beyond learning, but also beyond directly representing their interests at other international organizations and integrations. By offering learning opportunities, we also offer a platform for discussions, for networking and for highlighting regional practices. We have also raised the ratio of lecturing experts coming from the region. We facilitate discussions and sharing of experience where participants and lecturing experts are actively included. With them, we try to identify good practices in the region, and jointly reflect on what they do, rather than just providing them examples of practices of more advanced countries. This helps them more critically assess their own processes and jointly seeks solutions on their challenges.

When we identify regional expertise and good practice, we also promote it at our learning opportunities or even via other (online) channels. We are happy to observe that the gained recognition boosts their self-confidence and positively affects their motivation to work further on implementing changes.

We believe that our mission is also to help develop the capacities that will help our constituency more effectively represent their interests and how they can make better use of their knowledge and how they can adapt to achieve this. An example where we brought together central bankers on this subject among other, was just recently delivered workshop on change management and leadership in central banks. As central banks base a lot of their work on knowledge, we touched upon a great deal of how to better institutionalize internal and external knowledge sharing.

We also try to equip experts with skills so they can better share their knowledge. With initiatives like the one in November this year, we strive to help experts with facilitation and presentation techniques. With them, we will reflect on how learning happens and what it supports. We believe that these skills are very important to support institutional efforts to voice their expertise in the international fora.