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The Financial Times has a fascinating article on the compensation of Central Bank Governors. Of the 7 central bank heads that were reviewed, the highest paid is Joseph Yam of the Hong Kong Monetary Authority. Appointed in 2005, his annual salary is $874,474.
Bernanke on the other hand, whose monetary policy has the biggest impact on the rest of the world is actually only paid $191,300.
ECB President Trichet takes home an annual salary of $533,035.
This means that Trichet gets paid close to 3 times more than Bernanke!
What is more interesting however is the ability of each central banker to stand up to politicians. Accordng to the article, the Governor with the least job security is actually Bernanke because he can be sacked by the US President “for any cause.” Trichet on the other hand can only be dismissed based upon a court decision.
Therefore it is now clear why Trichet’s talk is much tougher than Bernanke’s who explains himself incessantly. Trichet never wavers under political pressure whereas Bernanke seems to always be bullied into a move by the markets and indirectly by politicians.
This indicates that Bernanke will continue to do all that he can to avert a serious recession in the US economy because of the backlash that he would receive from the government. Trichet on the hand will continue to finely balance inflation with growth and not worry too much about the political ramification of his decisions.
Republished from the FT:
Highest Paid Central Bank Governors:
#1 Joseph Yam, Hong Kong Monetary Authority
#2 Mervyn King, Bank of England
#3 Jean-Claude Trichet, European Central Bank
#4 Axel Weber, Bundesbank Germany
#5 Svein Gjedrem, Norges Bank
Salary: $274,672 (includes benefits)
#6 Stefan Ingves, Riksbank Sweden
#7 Ben Bernanke, Federal Reserve