July 2, 2022
  • July 2, 2022

Why we need a gender-sensitive central bank – Anita Bhatia

By on April 29, 2021 0

The pandemic has worsened gender disparities. Central banks must recognize that they have a role to play in reversing these trends.

Anita bhatia

The coronavirus pandemic has particularly affected women, especially where they are most vulnerable: their income, their health and their safety. Women make up the majority workers in many sectors of our economies that shut down last year. To make matters worse for women, health systems have reduced or delayed sexual and reproductive health services to streamline treatment for Covid-19. And locks and curfews have coincided with a peak in domestic violence.

These problems point to a prolonged reduction in the ability of women to join the labor market, repay loans, provide guarantees or start businesses. Worse yet, these threats to national economies could become permanent unless policymakers act quickly. This includes central banks, which have a number of tools to tackle the worst effects of the pandemic on women.

The problem, of course, is that central banks are notoriously male dominated institutions. Historically, they have never made gender a priority in the design and execution of policies affecting monetary positions, banking regulation, deposit insurance or bond issuance. Changing this model will require four changes in the policy-making process.

Women in the room

First, we need gender responsive stimulus packages. Governments have responded to the crisis with fiscal and monetary programs designed to stabilize aggregate demand. These included tax cuts, loan guarantees, wage protections, updated electricity bills, suspension of social security contributions and direct cash transfers. Central banks, for their part, have expanded their balance sheets to unprecedented levels and at breakneck speed, printing money to buy not only government bonds, but also corporate financial assets. In many countries, especially in advanced economies, the overall response has been massive, because it had to be.

But the data collected by UN Women Monitoring the global response to gender Covid-19 show that only a few countries have adapted their policies to take into account the specific needs of women. The result was slower recovery for everyone. As the world braces for a new wave of stimulus spending and reconstruction investment, it is essential that these interventions are designed not only with women in mind, but also with women in mind.

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Second, women need loans and central banks important role play on the way in which credit is directed to specific sectors. Therefore, it is important to ensure that funding reaches the sectors where the majority of women work. As more women lose their jobs or are displaced – even in the informal economy – banks will need to reassess and possibly reclassify the segments of their loan portfolios that cater to female borrowers.

These segments – spanning hospitality, food, retail, tourism, domestic services, clothing, and other industries where women constitute a majority of the workforce – are generally designed as “Lighter on guarantees”. But before the pandemic, they had grown rapidly in emerging and developing economies, especially among local banks. This growth has been driven as much by a commitment to equality as by the commercial potential of a previously ignored cohort of customers. If the recovery fails women, bank profitability will suffer.

“Gender ties”

Third, governments need new sources of funding, as budget balances have been decimated by the pandemic. Public debts have grown exponentially and will need to be renewed in the next few years as sovereigns compete for funding in international bond markets. Seeking an edge in this competition, many will resort to thematic bonds aimed at addressing environmental and social development issues. Demand for these securities is large and growing, now that more than 3,000 investment houses ( with a total of $ 100 trillion under management) joined the UN-sponsored program Principles of responsible investment. But if many private companies and public enterprises have issued “gender bonds”, no sovereign has yet. That has to change, and when it does, central banks should be part of the process.

Finally, we need better forecasts. Central banking models and the policies that flow from them can be biased and incomplete, because they are based on assumptions that ignore the realities of how households consume, save, invest, borrow and work. For example, most models treat women’s participation in the labor market as a binary choice between work and leisure, rather than a trinary choice also including unpaid work such as childcare.


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Likewise, projections of growth – and therefore demand for money and transmission of interest rates – are based on systems of national accounts that do not correctly measure the care economy, a rapidly growing but mainly non-market sector. where women represent the bulk of the workforce. The pandemic, which has led to an explosion in demand for care, has turned this weakness into a major gap.

To their credit, central banks were quick to recognize the challenges posed by climate change. Some are already pleading for solutions and leading the first reform efforts. But even though gender disparities are an equally systemic challenge, central banks have yet to forge similar partnerships with gender equality advocates. Such partnerships are urgently needed to inform the design and implementation of global and national reforms. The benefits – for both women and men – would be huge.

Republication prohibited – Copyright Project Syndicate 2021, ‘Why we need a gender-sensitive central bank