09.08.06
Central Bank of Seychelles: Background
Seychelles has one of the strongest economies in Africa, but during the last years it has experienced some kind of economic stagnation. For this reason, Seychelles Government favoured economic liberalisation part of which is the independency of the Central Bank. In 2004 the Central Bank of Seychelles became an independent institution, by the approval of the parliament of Seychelles.
Autonomy was given to the CBS following an advice by the International Monetary Fund (IMF), which in July 2002 had found some weakness in the Bank’s supervision system and regulations of the government’s financial sector. Also, now it is more than usual way of organizing a government financing bank in many countries, therefore, the Central Bank of Seychelles was regulated to comply with modern international standards. Main advantages of Bank’s autonomy were better realisation of its corporate objectives, ensuring accountability and transparency of monetary system supervision, possibility to introduce adequate measures to control inflation and ensure price stability.
The independence of the Bank is guaranteed by the change in the composition of the Board of Directors which is responsible for administering of the Central Bank, as well as separation between the Finance Ministry and the Central Bank of Seychelles. The CBS Board of Directors is comprised of six members – a Governor and Deputy Governor and four other members appointed by Seychelles President James Michel. The President is consulted by the Bank’s Board of Directors but he does not dictate to them.