After months of debate over who should get the appointment, Janet Yellen, previously the vice chairman of the Federal Reserve, was nominated to lead the institution. If confirmed by the Senate, she will be the first woman at the helm of America’s central bank. And just weeks after her nomination, Karnit Flug has been named to head the Bank of Israel, the first woman to lead that country’s central bank.
If Yellen gets the confirmation, these two would increase the number of women running the world’s central banks from 17 to 19 out of 177.
The lack of women in central banking may continue to ease as Mario Draghi, president of the European Central Bank, is reportedly focused only on female candidates to fill its new financial supervisor job. Currently, the central bank is run by a man and its Governing Council and General Council are filled entirely by men. Its Executive Board also remained all-male after Yves Mersch was appointed to it 10 months ago. Given that sea of male faces, four euro-zone central bank officials told Bloomberg News that the next senior appointment needs to be a woman, with Daniele Nouy from the Bank of France leading the pack.
It’s slow progress, and central banking is coming very late to gender equality. But there’s reason to think that it will benefit from opening up to both genders. Past research has found that as much as 20 percent of the United States’ growth in productivity over the last 50 years is thanks to breaking down barriers for women and minorities, given that it has meant a larger pool of talent to draw candidates from than just white males. The authors point out that means an “improved allocation of talent.” Janet Yellen, for example, is an extremely well qualified candidate.
Gender diversity in leadership has also proven to bring better decision making in the financial world. One study found that companies with a gender diverse board on a particular index outperformed those that were male-only by 26 percent over six years. Another that looked at Israeli companies found that boards with at least three members of both genders at meetings had significantly larger returns on equity and net profit margins.
There are still plenty of glass ceilings that have yet to be broken in the world of economics. The World Trade Organization has never had a woman as its Director-General. The U.S. Treasury has never had a female Secretary. The International Monetary Fund only just had its first woman leader when Christine Lagarde became Managing Director in 2011. Not to mention the dearth of women at the top of corporate America or on Wall Street.