In the early 19th century, an investor known as the Widow Borski acquired almost half the shares of the Netherlands’ new central bank to assist a nation strapped by the Napoleonic wars.
Two centuries later, women -- who control more than $20 trillion or about 70 percent of global consumer spending -- account for only about a tenth of the voting power on the world’s key interest rates. Past and present female central bankers say this should change.
They argue that greater representation for their gender may provide broader insight into economic behavior and even promote more financial stability. One academic study in 2000 found that women who served on the Federal Reserve’s Open Market Committee from 1966 to 1996 were among the most “ease-oriented” officials and that increasing female involvement “could have an important effect on policy outcomes.”
If “it’s all men, then you are excluding quite a wide range of opinion,” said DeAnne Julius, a former Bank of England policy maker and now chairman of London-based Chatham House, an international research group. “Women have different social networks, shop in different places. This makes for a more diverse representation of experience and interests.”
Among officials who publicly vote on monetary policy in the Group of 20 leading economies, only about 10 percent are women. Females head the central banks of Argentina, South Africa, Malaysia, Honduras, Botswana and the Bahamas, and currently form a majority of governors at the Fed.
Recent turnover at the European Central Bank and Bank of England has left their policies in all-male hands. There also aren’t any women now among the officials who dictate interest rates for Australia, Brazil, Indonesia, India, Mexico and Turkey.
Even though a greater balance may be achieved as more women enter economics and banking, Julius says governments may need to follow Kenya and Japan by introducing quotas. Kenya’s central-bank act mandates that two of its four external committee members be women, bringing their share of the interest-rate vote to 25 percent. Since 1998, the Bank of Japan has reserved one of its nine policy-board spots for women.
“While I’m not generally in favor of quotas, when things don’t happen naturally a quota can drive change,” said Julius. “It forces policy makers to think about why there aren’t more women being represented.”
The women who drive 70 percent of total consumer spending decide how their families use financial services, insurance and health care, according to a Boston Consulting Group poll of 23,000 women in 22 countries.
Chief Household Officer
“Women are their household’s chief financial officer,” said Michael Silverstein, a Chicago-based senior partner and managing director at BCG and co-author of “Women Want More,” a 2009 book about the ways companies can capitalize on female consumers. The book estimates that by 2014, women could earn about $18 trillion a year and control as much as $28 trillion of spending.
Fed Governor Elizabeth A. Duke cited surveys in a May 2010 speech that show women account for 80 percent of all consumer-expenditure decisions in the U.S., making 93 percent of food purchases and 65 percent of auto buys.
“Because women engage in more of the family shopping, they are consistently aware of price changes and inflation,” Duke said. “Women running households know just what it takes to make the budget stretch.”
Women may bring other skills to decisions about interest rates, said Anne Sibert, who sits on the board of Iceland’s central bank. Men may be “more risk-loving and overconfident,” she said.
‘More Aggressive Stance’
“Men have a more aggressive stance, which is sometimes destructive and can pull things apart,” Sheila M’Mbijjewe, a member of the Central Bank of Kenya’s Monetary Policy Committee, said in an interview. “In the financial world, the requirements for stability and predictability cannot be over-emphasized, and women can bring that.”
Her argument is reflected in studies by John Coates, a former derivatives trader at Deutsche Bank AG. His work suggests that some differences in risk-tasking may be explained by women producing about 10 percent of the testosterone of an average man in his 20s.
Only 2 percent to 3 percent of the traders at the investment banks he studied were women, while about 60 percent of the asset managers, who have more time to analyze the risks they’re taking, were female, according to Coates, who is now a senior research fellow in neuroscience and finance at the University of Cambridge in England.
The 2000 academic paper on the Fed’s decision-making process found that in the three decades until 1996, six of the seven women who served on the rate-setting FOMC were among the 13 policy makers most inclined toward lower interest rates.
While the small sample prevented economics professors Henry Chappell of the University of South Carolina and Rob Roy McGregor at the University of North Carolina from making more than speculative conclusions, they said the results suggest that “greater representation of women in the Fed’s monetary-policy-decision process could have an important effect on policy outcomes.”
Three women sit on the Fed’s 10-member FOMC and on its board, which currently has five members and two vacancies: Duke, who was previously chief operating officer of Virginia-based TowneBank; Sarah Bloom Raskin, the former Maryland commissioner of financial regulation; and Vice Chairman Janet Yellen, who chaired the Council of Economic Advisers under President Bill Clinton and ran the Federal Reserve Bank of San Francisco.
Central Bank Chiefs
In Argentina, Mercedes Marco del Pont, former president of state-owned Banco de la Nacion Argentina, has headed the central bank since February 2010. Gill Marcus, past chairwoman of Barclays Plc’s Absa Group Ltd., became South Africa’s central bank governor in November 2009.
Outside of the G-20, Zeti Akhtar Aziz runs Malaysia’s central bank, Maria Elena Mondragon is the president in Honduras. Wendy Craigg is chief in the Bahamas and Linah Mohohlo in Botswana.
Emerging markets are “much more concerned about growing our societies,” said Marcus, who remembers turning up for meetings of international counterparts to find she’d been placed on the list of officials’ spouses. “Advanced economies are much more established in their ways of doing things.”
Only two women -- Gertrude Tumpel-Gugerell and Sirkka Haemaelaeinen -- have had any say in the ECB’s rates since the euro began trading in 1999. Men account for 27 of the 31 officials who have voted on monetary policy at the Bank of England since it gained independence in 1997.
Women may need to take more initiative, said Joanne Kellermann, executive director at the Netherlands’ central bank. Her institution has particular reason to hail women after being bankrolled in the early 1800s by Johanna Pieters Borski. The widow of a wealthy merchant of rice and grains, Borski helped King Willem I by buying 2,000 of the central bank’s initial 5,000 shares, attracting other investors and making a profit.
While the Dutch central bank is on course to have women in a third of management jobs, Kellermann said she intervened last year to add a woman to the short list for one posting.
“Many women are inclined by nature to wait until the organization notices their management potential,” Kellermann told an ECB forum on diversity in March. “They only apply for a position if they comfortably meet all the job requirements.”
While lawmakers in the U.K. have called for more women to consider joining the Bank of England’s rate-setting committee, there was only one woman among the 27 candidates when a position became available this year. The previous opening attracted resumes of 34 men and four women.
‘Wish We’d Had More Women’
“I really wish we’d had more women, and I can think of women who I think would be good,” Kate Barker, the longest-serving female on the U.K.’s Monetary Policy Committee, said in a June interview.
She never detected prejudice or felt she was being “belittled,” said Barker, who served from 2001 to 2010 and is now a senior adviser to Credit Suisse Group AG. “It’s just odd to spend the whole day in a room with 13 blokes; it’s not the way the world is,” she said. “You’ve always got to be on the alert that you’re getting equal weight and equal treatment.”
Part of the problem may lie in the lack of women with relevant qualifications and technical skills, said Iceland’s Sibert, who also teaches economics at Birkbeck University in London. Women who have the experience to be policy makers today faced “overt” discrimination in their early careers that would shock their younger counterparts, she said.
“Macroeconomics has been traditionally a male-dominated field, and once something is male-dominated, it tends to remain so,” she said. “It promotes aggressive behavior. It can be quite difficult for women to overcome.”
At the Massachusetts Institute of Technology in Cambridge
-- where Fed Chairman Ben S. Bernanke and Bank of England Governor Mervyn King taught -- only 16 percent of undergraduate and graduate students studying economics in 1980 were women, compared with 40 percent this year. The highest ranked woman on the RePEc online database of economic citations as of June was the University of Maryland’s Carmen Reinhart, at 52nd.
Data suggest a similar discrepancy exists in financial services. Research by the London-based Financial News showed in March that less than 5 percent of the most-senior executives at investment banks are female.
That creates a “pipeline problem” that may be fixed as more women study economics and enter banking, said Susan Phillips, 67, a former Fed policy maker who served as dean of the business school at George Washington University in Washington until last year.
Phillips remembers a meeting of central bankers in Basel, Switzerland, at which then-ECB President Wim Duisenberg opened the talks by welcoming “gentlemen and Miss Phillips.”
“It’s going to change, but it’ll take time,” she said.