think and operate. the bank of england was established to lend money to the government ; and though the maastricht treaty now prohibits any buying of british government debt by the bank of england in the primary market, the bank still manages government funding operations in an essentially agency capacity ( and the present governor first came to public prominence in this area! ). by contrast, the origin of the federal reserve banks in the usa lay in the provision of a reliable nation - wide payment and depository system, and that remains a central activity. while some banking supervision is conducted by the fed, that is largely the remit of ( myriad ) other institutions ( the office of the comptroller of the currency, banking regulators in each separate state and the federal deposit insurance corporation ). the bundesbank was set up against a background of the need to restore and maintain a stable currency, and this, together with the concomitant political independence, remain at the heart of its role. an early strong belief in the “ real bills ” doctrine still influences the bundesbank ’ s views on appropriate collateral for central bank operations with the market, and justifies its large branch network and staff. the banque de france has retained more retail banking than most other modern central banks, maintaining branches in every french departement ( a network it has found difficult to slim down in face of local and trades union opposition ). it also makes use of its branches in compiling a centrale des risques, a register of commercial bank lending, and in keeping track of the million or so individuals who have drawn bad cheques! the bank of japan is more of a medley. its role model when it was established in 1882 was, you may be surprised to hear, the banque nationale de belgique, though some aspects of english banking practice were also adopted. legislation in 1942 followed the then german model, particularly in making the bank of japan subservient to the ministry of finance ; and after the war, there was american influence. 1 rosa maria lastra, “ central banking and banking regulation ”, lse financial markets group, 1996, page 285. in figures 1 and 2, i have attempted to capture some of the distinctions between these leading central banks. ( because i am concentrating on distinctions, i have omitted common tasks - such as the issuance of banknotes and acting as banker for government - which are carried out by virtually all central banks. ) figure 1 shows the uk ’ s

52, 000 staff, having created over 7, 000 additional posts in the previous two years to conduct its various new functions. central bank staffing and costs all this shows that, even though all european central banks face similar pressures, the solutions remain quite diverse. that is reflected in relative costs. comparable data are hard to come by, but the bank of russia appears to have more staff per head of population than any other. the people ’ s bank of china is larger, employing some 150, 000 people ( but only 1, 000 in head office where policy is centralised ), but considering the pboc ’ s continuing role as banker to the state - owned enterprises that looks small in relation to a population of 1. 2 billion. other very large central banks are the reserve bank of india with 32, 000 staff and the us federal reserve system with 25, 000. one would expect the number of staff employed by a central bank to depend not just on the population of the country ( and in this there should be some economies of scale ) but also on the range of tasks it has and how efficiently it conducts them. at the bank of england we take a lot of interest in comparative efficiency : we are determined to be a value for money central bank, and benchmark ourselves against others wherever possible. some of the data we use are confidential : central banks are more candid with each other in private than they are in public. but there are a few published measures. a study in 1995 by fry, goodhart and almeida3 of a sample of 30 central banks, largely from developing countries, tested twelve variables as possible explanations of non - supervisory staff numbers. most significant was a country ’ s population, with an elasticity of one half, confirming substantial economies of scale across the sample countries. there were positive relationships with real per capita income ( central banking appears to be a luxury good! ), the number of branches, and the use of exchange controls ( both of which would increase staff needs ). perhaps surprisingly the more independent central banks seemed to employ fewer staff ( perhaps that could be the basis of an accommodation with gordon brown! ). amongst the variables which showed no relationship was the inflation rate ( though there could be a simultaneity problem here ). figure 4 shows the numbers of staff employed two or three years ago by the central banks of various industrial countries and some of the transition economies. there is clearly the expected positive relationship with population, but the ratio varies hugely :