Central banks, big and small – Bank Underground

Benjamin Kingsmore

Central banks do a lot of things: they implement monetary policy, regulate financial institutions, manage payment systems and analyse economic developments. Many of their tasks are crucial to the functioning of a modern economy. And to make all this happen in practice, armies of unseen officials do the necessary implementing, regulating, managing and analysing. In this post I try to answer some questions about these officials: how many are there? Where are they? And if you wanted to host a party for central bankers, what would be the most convenient location?

As ever the first step is to get some data. For this I use Central Banking’s directory of central banks. Among other things, it provides information on staff numbers for the vast majority of central banks around the world. Using web scraping techniques, I collect staff numbers for the 188 central banks which provide data. Reporting isn’t totally consistent – for some central banks only a few years are reported, while others provide annual figures back to the early 2000s.

Taking the most recent data available for each central bank (2020 on average), it looks like there are around 450,000 staff across the world’s central banks. This number appears to have drifted down a little (from closer to 480,000) in the years after the global financial crisis. However, I’m not particularly confident about this historical comparison given some of the gaps in the data (I take a look at some time series data for advanced economies later in the post).

Central banks vary a lot in size. The median central bank has just under 1,000 staff, but the smallest have a tenth of this while the very largest has a hundred times more. Most fall somewhere in between, with 65% employing 500–5,000 officials (Table A).

Table A: Most central banks employ 500 to 5,000 staff

Before starting to look at the size of individual central banks, an important caveat – central banks have different functions. For example, some supervise commercial banks or run national credit registers, while others do not. This will naturally affect the number of staff they have. Unfortunately, I haven’t been able to find easily comparable information on central banks’ functions, so you should bear this in mind in the rest of this post.

Now, if you were looking for central bankers, Europe and East Asia seem like hotspots (Figure 1).

Figure 1: There are quite a few large central banks in Europe and East Asia

The relative size of different central banks becomes clearer in the ‘tree map’ diagram below, where the area of each rectangle is proportional to the number of staff at that central bank. To give a sense of scale, the Central Bank of the Philippines (top centre) has around 5,000 staff.

Figure 2: Central banks vary greatly in size

A few facts immediately jump out from Figure 2:

• The People’s Bank of China is very large. Indeed with 125,357 staff in 2018 (the most recent data), it has more officials than all other central banks in Asia combined.
• Many of the other ‘big hitters’ are in Europe, including the Bank of Russia (49,400), Deutsche Bundesbank (10,382) and Banque de France (9,535).
• The ECB and Federal Board are relatively small parts of their central banking systems, with around 8% and 13% of total system staff respectively.

Of course, you probably wouldn’t expect all central banks to be the same size – countries have different sized economies and financial systems, and central banks do not all perform exactly the same functions. So, is there a more nuanced way to think about the size of different central banks?

While unfortunately I can’t account for their different functions, two simple ways of scaling each central bank’s size are by population (central bankers per capita if you will) or by the size of a country/currency area’s economy, as measured by its gross domestic product (GDP). My population and GDP data come from the World Bank, and for GDP I have used real purchasing power parity adjusted US dollar GDP.

I’ve plotted staff numbers against population and GDP in Figure 3, and you can see the relationship you might expect – generally speaking, countries with larger populations and/or bigger economies have more central bank officials. Indeed, a very simple regression suggests you can explain about 70% of the variation in central bank staffing by the size of its country’s population and GDP. The relationships between central bank staffing and population or GDP are roughly linear, although because countries vary enormously in size I’ve plotted both axes on log scales.

How the size of a country’s economy affects central bank size is an interesting question. Perhaps larger economies increase the complexity of central banks’ tasks, which determines the number of staff needed. Or it’s possible that countries effectively end up allocating a certain proportion of their resources to central banking, and this is the primary driver of the relationship. There do seem to be some economies of scale in central banking, because staff numbers do not increase 1:1 with country size. For example, at US$10 billion GDP you’d expect your central bank to have around 200 staff, and at US$100 billion around 440.

Figure 3: There is an intuitive relationship between economy and central bank size

Looking at scaled staff numbers starts to reveal some of the other factors influencing central bank size. In Figure 4 I’ve coloured the points by World Bank country income categories and whether a country is an offshore financial centre according to Eurostat. For the income groups you can see a similar relationship between size/population and size/GDP, whereas the offshore financial centres – which tend to be small countries with large financial sectors – are clustered towards the top right, ie they have more central bankers than you would expect given the size of their economies.

Figure 4: Offshore financial centres have a lot of central bankers relative to the size of their economies

At the other end of the spectrum, there are some central banks that have few officials given the size of their economies. Sweden’s central bank – the Sveriges Riksbank – has less than one central banker for every US$1 billion of GDP, compared with an average of 14. On a per capita basis the State Bank of Pakistan looks small. If you randomly invited people to a party in Pakistan you’d need a guest list of nearly 200,000 before you’d expect to get one central banker. In an average country you’d need about 4,000, and in the Cayman Islands you could get away with 260.

As a reminder, this doesn’t account for the different functions central banks have – you wouldn’t get any bank supervisors turning up to a central banking party in Sweden for example, not because they are anti-social (as far as I know) but because they do not work for the central bank.

Finally, I thought it would be interesting to consider how central bank staffing has changed over time, and another way of scaling – namely relative to the size of the rest of the financial system. To do so I narrow my focus just to advanced economies, as there tend to be fewer gaps in their staffing data and to make comparison with data from the Financial Stability Board (FSB) on the overall size of the financial system more straightforward (for this section I’ve used the FSB set of advanced economies: Australia, Canada, Cayman Islands, euro area, Japan, Korea, Singapore, Switzerland, UK and US).

From 2009 to 2022, total staff at advanced economy central banks grew by about 10%, from around 84,000 to just over 92,000. Over the same period, assets held by the rest of the financial system in these countries (ie excluding the central banks themselves) grew by nearly 30% after adjusting for inflation. So, relative to the size of their financial systems – in some sense the territory they have to cover – advanced economy central banks have shrunk by about 15% in the last decade and a half (Figure 5).

To be clear, this doesn’t tell us if staffing levels at these central banks are ‘right’, or have become more or less appropriate over time – we would at least need some data on their functions for that (these can vary over time – for example, the Bank of England took on a range of regulatory and supervisory roles during this period). But it does show that advanced economy central bank staffing has lagged somewhat behind growth in the wider financial system.

Figure 5: Advanced economy central banks have fewer staff relative to the size of their financial systems than in 2009

I hope you now feel a little better informed about the world of central banks. And if you do decide to host that party for central bankers, I can recommend the Cayman Islands.

This post has been prepared by incorporating data originally published in the Central Bank Directory whose owner, Infopro Digital Risk (IP) Limited has kindly permitted to be reproduced.

Benjamin Kingsmore works in the Bank’s Financial Stability Strategy and Projects Division.

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