The option to wait - never exercise early
On spinach, Brussels sprouts, and the culture of coordination
To answer the question from my previous post, “What would have happened if Breman did not sign the ECB statement?” Well, there is always the option to wait.
Central Banking and Coordination
I joined De Nederlandsche Bank (DNB) in July 2008, arriving from UNC Chapel Hill. The cultural adjustment was significant. US academia can be brutal: workshop presenters often don’t get past their first slide, and discussants’ comments can reduce colleagues to tears. Academic culture is highly individualistic, with little emphasis on collective activities like lunching together. Academics are hellbent on publishing.
DNB, with its 36-hour work week when I joined (six week before Lehman collapsed), was more … civilized. What mattered: speaking and writing well, not interrupting speakers, the daily lunch with colleagues, and gallantry. But the starkest difference was the importance of coordination: in Dutch, “afstemmen.” Every policy initiative required coordination with relevant stakeholders.
As an academic unaccustomed to this culture, I dreaded it. Coordination absorbed time through endless meetings and phone calls. I often felt I could only do meaningful work after 4pm, when colleagues’ minds turned toward home. Many colleagues shared this frustration, particularly when participants weren’t fully prepared, dragging productivity down.
No surprises
Yet DNB was right to value coordination. With the ECB handling monetary policy, DNB’s role was fundamentally about financial stability. This means no surprises. I witnessed cases where colleagues single-handedly made important decisions, which invariably ended poorly. Even obvious, no-brainer decisions required coordination with all relevant stakeholders: managers, researchers, and when appropriate, ministries and ministers. This to get buy-in, to learn from others, to communicate intentions, etc. To prevent paralysis, a rule mandated that important decisions be made within three months, which gives you an idea of the deliberation involved.
Like spinach or Brussels sprouts, I didn’t enjoy coordination, but it was good for the institution regardless.
The Contrast with Orr
Fast forward to Adrian Orr at the RBNZ. My interpretation of his leadership is that he undervalued coordination with stakeholders. The decision to increase capital requirements to protect against a 1-in-200 year systemic shock is a case in point. From people close to the process, I learned he did not adequately coordinate with relevant internal and external stakeholders. As a result, the RBNZ eventually had to back down, which it recently did. Under Orr’s aegis, also many researchers left. Why employ researchers if you won’t listen to them?
Orr’s tenure was characterized by impulse-driven decision-making rather than the restraint and prioritization that central banking demands.
A Disappointing Pattern Continues
Against this background, I had hoped Governor Breman would restore the RBNZ’s reputation by ending the era of impulse-driven decisions and focusing on core business: financial stability, prudential oversight, monetary policy.
Then came the ECB statement. When BusinessDesk’s Andy MacDonald queried the RBNZ, a spokesperson said a decision on whether to support the solidarity statement was needed in the early hours of January 14. “There was not enough time to inform the minister [of finance],” the spokesperson said.
This is concerning. Breman could have held off signing. She could have used the extra time to confer with colleagues, discuss implications, and sound out stakeholders, all without losing face or endangering her reputation or the reputation of the Bank. My previous post emphasized the importance of prioritization and restraint. These are not merely diplomatic virtues; they are operational necessities for central bank independence.
The Option Was Always There
The claim that there wasn’t enough time is contradicted by the ECB website itself, which even today notes: “Other central banks may be added to the list of signatories later on.” This was a deliberate choice by the ECB, allowing other central bankers to join after coordinating and conferring with stakeholders.
Even without that caveat, Breman could have emailed the ECB requesting more time. That’s leadership basics: when asked to do something potentially fraught, buy more time to coordinate properly.
Central Bank Independence Is Not Isolationism
Central bank independence requires prioritization (knowing which battles matter for your mandate), and restraint in venturing beyond that mandate. It does not mean isolation from stakeholders or acting without coordination.
The irony is profound. My previous post highlighted how Breman’s well-intentioned gesture invited precisely the political interference she sought to oppose. Now we learn the decision was made without basic coordination that would have revealed this risk.
What we see instead appears to be a continuation of the Orr tradition: acting on impulse, struggling with basic coordination, and resorting to weak justifications when challenged.
A Broader Concern
This matters beyond the immediate controversy. If the Governor struggles with coordination on a basic discretionary public statement, where she had the option to wait, what does this signal about decision-making processes during genuine crises?
Financial stability requires no surprises and coordinated responses. When a weaker bank approaches non-viability, there is no luxury of waiting or reflection. In those moments, coordination mechanisms must already be deeply embedded in institutional culture. They cannot be improvised under pressure.
The RBNZ’s first priority remains rebuilding credibility and establishing a culture of coordination, even if that culture feels cumbersome to those trained in more individualistic environments. Like spinach or Brussels sprouts, you may not enjoy it, but it’s essential for institutional health.
The option to wait exists for a reason. It allows for the coordination, prioritization, and restraint that genuine central bank independence requires. That option should never be exercised early, especially not during the early hours of the morning.