## wp18176

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### I. Introduction — changing roles and implications for legal protection
- Over the past decade central banking roles expanded from predominantly price stability mandates to include macroprudential and microprudential functions, consumer protection, financial integrity, and economic development.
- The Global Financial Crisis (GFC) prompted central banks to engage in resolution of troubled banks and unconventional activities including quantitative easing, increasing balance sheets and exposure.
- Expanded integrated functions heighten the need for legal protection arrangements embedded in central bank laws; cross-country comparisons require detailed country-by-country legal analysis.
- Recent FSB agendas show central bankers and supervisors discussing climate change, Fintech and cyber risks, gender diversity, compliance, sustainability, and risk culture.

### Box 1 — Terminology (definitions used in the paper)
- Legal protection: safety provided to the central bank and financial supervisor from liability.
- Appropriate protection: form of legal protection that balances accountability (liability) with independence (immunity).
- Liability: acceptance of responsibility for actions and omissions by civil, criminal, and administrative law.
- Immunity: protection of public institutions, decision-makers, staff and officials from liability for actions and omissions.
- Indemnification: legal and financial support in case of liability issues (compensation for defense costs or direct legal assistance).
- Legal arrangements: constitution, law, jurisprudence or other documentation guiding protection, liability, immunity, and indemnification.

### II. Central bank governance: legal protection as a balance between independence and accountability
- Governance links legal mandate, independence, accountability, and internal organization and is central to determining appropriate legal protection.
- The more independent a central bank, the more it needs to be answerable to the State and society.
- Accountability mechanisms vary and include:
  - disclosure of information on mandate, organization, policies, operations, outcomes, and relations with government;
  - published minutes, reports to Parliament, parliamentary hearings, open letters for missed inflation targets, and one-on-one discussions between the Governor and the Minister of Finance.

- Categories of central bank independence (as set out in the text):
  - Policy, or institutional independence: freedom of policy decision-making with mandate defined in legislation.
  - Operational independence: prohibition from seeking or taking instructions from any private or public body; third parties prohibited from approving, suspending, annulling, or deferring central bank decisions; third-party representatives should not have voting rights.
  - Personal independence: adequate security of tenure for decision-making members; minimum term longer than the electoral cycle; “double veto” appointment/dismissal procedures; clear eligibility requirements preventing government officials/politicians from appointment as full voting members; protection from arbitrary dismissal.

### IV. Financial independence: objectives and legal-protection trade-offs
- Financial independence includes continuous availability of sufficient financial resources to fulfill the mandate (“policy solvency”).
- Key features of financial independence:
  - central bank always sufficiently capitalized; government required to automatically recapitalize if capital falls below authorized level;
  - clear rules for determination of budget, distribution of net profits and losses;
  - accounts prepared in line with internationally recognized standards;
  - prohibition or clear limitation on loans to government or other fiscal financing.

- Importance for mandate credibility:
  - independence supports credibility and trust in the central bank and financial sector;
  - independence constrains government from financing expenditure via money creation.
  - financial supervision also requires operational independence; where government financing is involved, more stringent accountability may be implied.

- Conceptual balance between legal protection, immunity, and liability:
  - Independence can be safeguarded by immunity, encouraging policy decisions without undue legal threat.
  - Accountability is safeguarded by liability, allowing actors to be taken to court for actions/omissions.
  - Excessive liability risks paralysis and overly risk-averse decision-making.
  - Appropriate legal protection should be context-specific and possibly function-specific.
  - Forms of legal protection: exclusion of liability, immunity, limitation of liability, indemnification.

### Liability regime taxonomy and international guidance
- Liability taxonomy:
  - Fault liability vs no-fault liability.
  - Fault liability subdivided into negligent conduct and intentional conduct (“bad faith”).
  - Negligent conduct further split into simple negligence and gross negligence.

- Function-specific international guidance referenced:
  - BCBS Principle 2 and Essential Criterion no. 9: laws provide protection to supervisors and staff against lawsuits for actions/omissions in good faith and protect against costs of defending such actions/omissions.
  - IMF (2010) “The Making of Good Supervision”: adequate legal protection for staff promotes willingness to take supervisory action.
  - FSB Key Attributes: principle 2.6 (and 4.4 sub [ii]) — resolution authority and staff should be protected against liability for actions/omissions in good faith while discharging duties, including support of foreign resolution proceedings.
  - BIS (2009): preference for limiting central bank liability for monetary policy; noted that “about 20 percent of central banks are subject to formal procedures when [inflation, AK] targets are missed,” and examples like the Bank of England’s open letter requirement when inflation misses by more than 100 basis points.

### Findings from IMF Central Bank Legislation Database (CBLD) and IMF TA/surveillance work (quantified)
- CBLD scope and search methodology:
  - Contains central bank laws and constitution excerpts of 143 IMF member countries and monetary unions.
  - Categories include 2.06, 2.09, and 12.04; full-text searches for “immunity,” “immunities,” “suit,” “indemnity,” “indemnify,” and “liable.”
  - Immunity from taxation considered out of scope for legal protection analysis but used for cross-checks.

- High-level CBLD findings:
  - 31 central banks (22 percent) do not have any financial supervision functions; 112 (78 percent) do.
  - 76 central bank laws (53 percent) contain at least one explicit reference to liability arrangements.
  - In the 76 laws with references:
    - 72 do not specify against whom protection is provided; exceptions include Turkey, Macedonia, Chile, and State Bank of Pakistan specified parties.
    - 43 out of 76 have explicit arrangements for partial exclusion of liability.
    - 33 out of 76 have no immunity arrangements or the law does not specify immunity arrangements.
    - 67 out of 76 do not contain specific references to criminal, administrative, or civil liability.

- IMF MCM TA database findings:
  - Query found 230 links (10 percent) to central bank and/or supervisory liability issues; 144 (6 percent) relate to unique TA missions.
  - The MCM TA database consists of 2,259 MCM TA reports from around 1980–2017.
  - Most TA missions raising liability issues occurred in the European and Asia Pacific regions and in the pre-GFC period of 2000–08.
  - Liability issues in TA missions most frequently relate to financial supervision, followed by other central bank issues, and financial crisis management and resolution; some cases involve AML/CFT, securities, or SWF liability.

- IMF e-Lib surveillance examples (selected):
  - Country 1 (2016): government proposed constitutional amendment to grant central bank operational autonomy and immunity to directors from lower-court prosecution.
  - Country 2 (2006): authorities stripped deputies and key public officials of immunity; legislative decree eliminated constitutional provision on immunity of public servants.
  - Country 3 (2005): new central bank law lacks immunity beyond Governor’s explicit immunity; suggestion to extend immunity to other officials including supervisory staff.
  - Country 4 (2007–2009): updated banking law provided only “limited immunity to supervisors during the discharge of their duties.”
  - Kosovo (2013): staff not liable unless intentional wrongful conduct or gross neglect proven and CBK obligated to indemnify legal costs; in practice employees covered defense costs until cleared and then claimed reimbursement, leading to inadequate practical coverage and delayed reimbursements.

- Summary observation: IMF staff repeatedly raised legal protection issues in TA and surveillance, but clearer, generally accepted guidance for central bank legal protection across all functions is lacking.

### Granular elements of legal protection analyzed (A–G)
- A – Protected against whom:
  - Majority of laws do not specify whom protection is provided against (72 of 76 with references).

- B – Protected against what:
  - 76 of 143 central bank laws contain references to liability (53 percent).

- C – Protected in what area:
  - 67 of 76 with references do not specify criminal vs administrative vs civil liability.

- D – Who is protected:
  - Varies across laws; commonly Board members, decision-makers, and staff; supervisory staff referenced in some jurisdictions.

- E – Protected against what standard:
  - Distinctions include good faith, negligence, gross negligence, intentional wrongful conduct.
  - 33 out of 76 do not state a specific benchmark standard.
  - Where specified:
    - Good/bad faith: 20 laws (e.g., Bahrain, India, Malta, Mauritius, New Zealand, San Marino, Seychelles).
    - (Gross) negligence: Belgium, Croatia, Honduras, Korea, Montenegro, Serbia, Tonga.
    - Combined/other standards: Philippines, Oman, Pakistan, Fiji, Namibia.

- F – Protected in what manner (indemnification):
  - Indemnification arrangements uncommon: 58 laws have unspecified or no arrangements; 18 laws provide explicit indemnification.
  - Country examples:
    - Bolivia: Article 60 permits emergency actions by president of central bank with Board members not held liable for those decisions.
    - Dominican Republic: Monetary and Financial Administration bears cost of defending staff charged, including staff dismissed or sanctioned for refusing actions contravening prohibition on financing public/private entities.
    - Guatemala: indemnification exists despite lack of explicit liability arrangements.
    - Iraq: indemnification for Board members, employees, agents; not applicable if convicted of a crime arising from underlying activities.
    - New Zealand: government indemnifies; Minister must report to House of Representatives details (Article 179A, Reserve Bank of New Zealand Act, 1989).
    - Papua New Guinea: Governor must report to Minister with details on circumstances, amount, person paid (Article 102 sub 4, Central Banking Act 200 (no. 1)).
    - Philippines: Section 15(e) and Section 16 provide complex indemnification and liability regimes for Monetary Board members, officials, examiners, and employees including advance payment of defense costs and conditions linked to final adjudication.

- G – Limitations of protection:
  - Fines and sanctions may still apply; liability exclusions often partial rather than absolute.
  - Practical limitations: indemnification may be delayed or require reimbursement if final adjudication excludes entitlement (Kosovo example).

### Scope of liability and types of liability (Subsection G)
- Central bank laws most often refer to administrative liability.
- Criminal liability explicitly referenced in nine laws.
- Civil liability explicitly referenced in seven laws.
- Country examples combining liability types:
  - Philippines: criminal, civil, and administrative liability.
  - Ecuador: “administrative, civil and criminal law liability”.
  - Dominican Republic: “notwithstanding criminal and civil liability”.
  - Lithuania, Guatemala, Kazakhstan, Turkmenistan, Pakistan, Uruguay: specific formulations cited.
- Subjects protected:
  - Immunity often allocated to “staff” and “Board members”; examples include Afghanistan (comptroller-general), Canada and Luxembourg (auditor), Malaysia (“any person lawfully acting on behalf of the Bank/officer/employee”), Libya (employees only), China (direct personal liability for lower levels; criminal prosecution “if the case constitutes a crime” or “administrative sanctions” otherwise), Bahamas (directors excluded from liability).
- Dissent-based exemptions:
  - Korea: Article 25 — MPC members “individually and jointly liable to the Bank of Korea” for damage caused by the MPC “whether willfully or through negligence”; members who “clearly expressed their dissent at the meeting” are exempted.
  - Uruguay: directors released from liability if present and noted their dissent (Article 19).

### Standards for protection (benchmarks and judicial conditions)
- 33 out of 76 do not specify a governing standard.
- Where specified:
  - Good/bad faith: 20 laws.
  - (Gross) negligence: several jurisdictions including Belgium, Croatia, Honduras, Korea, Montenegro, Serbia, Tonga.
  - Combined or other standards: Philippines, Oman, Pakistan, Fiji, Namibia.
- Judicial outcome-linked standards:
  - Conviction by a court of law cited in Afghanistan, Iraq, Honduras, Guatemala, Philippines, Turkey.
  - Generic court ruling cited in Dominican Republic, Trinidad and Tobago.
  - Central bank can assume explicit liability in Belarus.

### Indemnification arrangements (prevalence and practice)
- 18 central bank laws provide explicit indemnification arrangements; 58 have unspecified arrangements or none.
- Notable practices:
  - Advance payment of defense costs allowed in Philippines (with undertaking to repay if not entitled).
  - Practical gaps: employees sometimes required to cover defense costs until definitively cleared, causing inadequate practical coverage and delayed reimbursements (Kosovo).

### Limitations to Protection: Fines and sanctions (prevalence and common offenses)
- Around 19 percent (27 out of 143 entries in the CBLD) have arrangements for specific fines or other sanctions in the central bank law.
- Remaining 81 percent may lack specific quantifiable sanctions in central bank law but could reference other laws with penalties (example: Luxembourg Criminal Code).
- Typical offenses subject to fines/sanctions:
  - Breaches of confidentiality and secrecy (sometimes termed “fidelity”).
  - Conflicts of interest.
  - General contravention of the central bank law.
  - Corruption and fraud (e.g., Kazakhstan, Trinidad and Tobago).
  - Specific actions: withholding information from an external auditor (Zimbabwe); “causing injury” (Thailand).
- Example of severe sanctions:
  - Maldives: sanctions for violating conflict-of-interest rules include “imprisonment or banishment or house arrest.”

### Quantified sanctions in central bank laws (countries, fines, imprisonment)
- 27 countries have one or more quantified sanctions: Bahamas, Bahrain, Belize, Botswana, Cambodia, Canada, Egypt, Fiji, Gambia, Ghana, Guyana, Kazakhstan, Kenya, Liberia, Malawi, Malaysia, Maldives, Mauritius, Namibia, Seychelles, Thailand, Tonga, Trinidad and Tobago, Uganda, UK, Zambia, Zimbabwe.
- Reported fines range from 7 USD to 700,000 USD.
  - Malawi: maximum fine of 5,000 K (approximately 6.89 USD) for secrecy provision violation.
  - Malaysia: maximum fine of 3 million Ringgit (approximately 708,466 USD) for secrecy provision violation.
  - Canada: 78,330 USD for contraventions such as holding office while ineligible or verifying false statements.
  - Bahamas: 50,000 USD for breach of confidentiality.
  - Thailand: 60,313 USD for various penalty provisions.
- Average (maximum) fine across central bank laws: 27,963 USD.
- Imprisonment:
  - Ranges from three months to 20 years.
  - Zimbabwe: maximum of three months for withholding information from external auditor; maximum two years for secrecy provision violation.
  - Canada and Guyana: lowest average maximum imprisonment terms of six months for specified contraventions.
  - Thailand: imprisonment up to 20 years, or even life sentence, for specified offenses.
  - Average maximum term of imprisonment across 24 countries: three years.
- Combination of sanctions:
  - “and/or” option (fine and/or imprisonment): 18 countries.
  - Combination requiring both fine and imprisonment (no option): five countries.
  - “Or” only (judicial choice between fine or imprisonment): Seychelles and Guyana.
  - Fiji: fine prescribed for secrecy violation with no imprisonment option.
  - Bahrain: includes a fine for confidentiality breach and a general reference to imprisonment without specifying a term.

### V. Selected country examples — overview and key points (illustrative)
- Colombia:
  - Banco de la República Act 31 of 1992 contains no references to liability or immunity.
  - Constitutional Article 90 and statutory Acts (Act 678 of 2001; Act 1437 of 2011; Act 734 of 2002; Act 610 of 2000) establish State/public entity liability regimes and fiscal responsibility procedures.
  - Central bank litigation experience includes UPAC methodology, foreign investment records, sanctions related to intervention operations, labor issues, and contracts.
  - Exception: Article 14 provides that international reserves cannot be seized.

- Cyprus:
  - Central Bank of Cyprus (CBC) subject to statutory liability limits for supervisory tasks tied to bad faith or gross negligence.
  - Business of Credit Institutions Law, Section 32: CBC and directors/officers not liable for acts in discharge of functions unless not in good faith or due to gross negligence.
  - Resolution-function liability limits in Law 22(I)/2016: limits liability of Minister of Finance, CBC Governor, CBC Board members, and CBC staff to acts/omissions in bad faith or gross negligence; does not cover the CBC as resolution authority in totality.
  - Litigation exposure: defendant in hundreds of claims from depositors and shareholders of two major banks resolved in March 2013; no decisions yet.

- India:
  - Reserve Bank of India Act, 1934 contains specific protections:
    - Section 43A: protection for actions taken in good faith by the Bank or officers under specified sections.
    - Section 58A: protection from “prosecution” to the Central Government or the Reserve Bank “or any other person” for acts done or intended in good faith under the Act.
  - Similar protections in Banking Regulation Act, 1949 (Sections 50, 54); Payment and Settlement Systems Act, 2007 (Section 36); Foreign Exchange Management Act, 1999 (Section 44); Credit Information Companies (Regulation) Act, 2005 (Section 30).
  - Litigation history: RBI frequently party to litigation covering policy actions and staff grievances; cited cases include Pramod Malhotra & Ors v UOI & Ors [2004 (3) SCC 415], J M D'souza v RBI [AIR 1946 Bom 510], Bimladevi v UOI & Anr [1985 58 Comp Cas 361 (Delhi)].

- Israel:
  - Bank of Israel (BOI) has no specific BOI liability, immunity, or indemnification provisions in BOI Law.
  - Torts Ordinance and Civil Torts Law (State Liability) provide defenses and immunities for State employees and public authority employees for lawful acts, except intentional harm.
  - BOI indemnifications exist in specific agreements but not by law.
  - Litigation: administrative law challenges, consumer claims where BOI is formal respondent, and employment matters.

- Thailand:
  - Bank of Thailand (BOT) subject to Tortious Liability Act B.E. 2539 (1996):
    - Section 5: state agency liable to injured person for tortious acts of officials in performance of duty; injured person may sue state agency but not official directly.
    - Section 8: BOT indemnifies injured party; BOT may claim payment from official if tort committed on purpose or with gross negligence; extent of claim must account for gravity, fairness, and system errors.
  - BOT Act (as amended) contains criminal liability provisions imposing penalties on officials; Sections 66–73 specify criminal offenses and penalties for Governors, Boards, officers, or employees.

### Section 66–73 (Thailand) — Criminal liability provisions (exact figures preserved)
- Section 66:
  - Offense: misappropriation/dishonest handling of property.
  - Penalty: imprisonment for a term of five to 20 years or a life imprisonment or a fine of 500,000 Baht to 2 million Baht or both.

- Section 67:
  - Offense: wrongful exercise of functions to coerce or induce delivery of property/benefit.
  - Penalty: imprisonment for a term of five to 20 years or life imprisonment or a fine of 500,000 Baht to 2 million Baht or both.

- Section 68:
  - Offense: demanding, accepting or agreeing to accept property/benefit in exchange for exercising/not exercising functions.
  - Penalty: imprisonment for a term of five to 20 years or life imprisonment or a fine of 500,000 Baht to 2 million Baht or both.

- Section 69:
  - Offense: performing/omitting acts in one’s function for benefit of self/others based on prior agreements before appointment.
  - Penalty: imprisonment for a term of five to 20 years or life imprisonment or a fine of 500,000 Baht to 2 million Baht or both.

- Section 70:
  - Offense: dishonest exercise of duties in purchase, execution, management or custody causing damage to BOT.
  - Penalty: imprisonment for a term of five to 20 years or life imprisonment or a fine of 500,000 Baht to 2 million Baht or both.

- Section 71:
  - Offense: taking interest for benefit of self/others in managing/looking after any activity, except acts assigned by BOT or under BOT regulations.
  - Penalty: imprisonment for a term of one to10 years or a fine of 100,000 Baht or 1 million or both.

- Section 72:
  - Offense: defraying expenses in excess of what should be defrayed for benefit of self/others.
  - Penalty: imprisonment for a term of one to 10 years or a fine of 100,000 Baht or 1 million or both.

- Section 73:
  - Offense: wrongfully exercising or not exercising functions to injury of any person, or dishonest exercise/omission of functions.
  - Penalty: imprisonment for a term of one to 10 years or a fine of not exceeding 100,000 to 1 million Baht or both.

- Administrative litigation example:
  - BOT has been sued in administrative courts for negligence in official duties related to regulation of financial institutions; cases remain ongoing.

### Conclusions, practical observations, and recommendations
- No unified global standard exists for central bank liability across all central bank functions; function-specific principles exist for supervisors and resolution authorities (BCBS, FSB).
- Empirical evidence (CBLD, IMF TA/surveillance) shows wide heterogeneity in legal protection arrangements and practical implementation.
- De jure protections do not preclude de facto court cases initiated by financial institutions, consumers, depositors, and current/former central bank employees; actions remain subject to continuous scrutiny and challenge.
- Legal protection is crucial for safeguarding independence and enabling difficult policy decisions without fear of direct repercussions; accountability must remain as a counterweight.
- Recommendations and tailored approaches:
  - Legal protection should be appropriate and possibly function-specific.
  - Tailoring should consider overall legal framework, legal tradition, judicial functioning, and the central bank’s position within the State.
  - Ex ante protection should be balanced by ex post accountability arrangements such as transparency provisions, reporting requirements to Ministers and/or Parliament.
  - Further analysis taking legal traditions into account and use of IMF databases on types of central bank liability (criminal, administrative, and/or civil) would be helpful.
- IMF role:
  - IMF surveillance and technical assistance have stimulated discussion and awareness of legal protection issues for central banks and financial supervisors.
  - Continued IMF engagement and clearer context-specific guidance could support better-aligned legal protection arrangements internationally.

*Source: IMF Working Paper — wp18176 (sections 2 and II excerpt).*

### 2. Liability Regimes for Central Banks and Financial Supervisors .........................................12

### 2. Liability Regimes for Central Banks and Financial Supervisors .........................................12

### I. Introduction — changing roles and implications for legal protection
- Over the past decade, central banking has changed significantly; before the Global Financial Crisis (GFC), central banks predominantly focused on their price stability mandate, had reasonably high levels of independence, and microprudential supervision was often dealt with by a separate agency or authority.
- The GFC impelled central banks to focus on matters affecting financial stability, including macroprudential and microprudential functions; these expanded roles led some politicians to claim central banks were acting beyond their legal mandates.
- Central bank roles and responsibilities now range widely and can include price and financial stability, consumer protection, financial integrity, and economic development.
- Recent Financial Stability Board (FSB) agendas indicate central bankers and financial supervisors are discussing topics such as climate change, Fintech and cyber risks, gender diversity, compliance, sustainability, and risk culture.
- Numerous central banks have dealt with financially troubled banks and have significantly expanded balance sheets by conducting unconventional activities, including quantitative easing.
- The attempted integration of a host of functions into one entity increases the need for legal protection arrangements embedded in central bank laws; comparisons beyond central bank laws would require detailed country-by-country legal analysis.

### Box 1 — Terminology (used throughout the paper)
- Legal protection: the safety provided to the central bank and financial supervisor from liability.
- Appropriate protection: the specific form of legal protection that balances central bank and supervisory accountability (in the form of liability) with independence (in the form of immunity).
- Liability: the explicit acceptance of responsibility for actions and omissions by civil, criminal, and administrative law.
- Immunity: protection of public institutions, their decision-makers, staff and other officials from liability for their actions and omissions.
- Indemnification: legal and financial support in case of liability issues. This could refer to central banks and governments compensating Board and staff members for legal representation and other legal defense-related costs, or providing direct legal assistance.
- Legal arrangements: any form of legal documentation (constitution, law, jurisprudence) that provides guidance for the protection of central banks and financial supervisors, their decision-makers, staff, and other officials, and deals with liability, immunity, and indemnification-related issues.

### II. Central bank governance: legal protection as a balance between independence and accountability
- Central bank governance is central to determining the appropriate level of legal protection; it connects the legal mandate, independence, accountability, and internal organization.
- The more independent a central bank, the more answerable it needs to be to State and society.
- Accountability mechanisms vary widely across central banks and include:
  - disclosure of information relating to the central bank’s mandate, internal organization, policies, operations, outcomes, and relations with government;
  - published minutes, reports to Parliament, parliamentary hearings involving the Governor, open letters indicating deviations from preset monetary policies, and one-on-one discussions between the Governor and the Minister of Finance—all means to explain actions and be held accountable.

### Categories of central bank independence (as set out in the text)
- 1. Policy, or institutional independence: the central bank has freedom of policy decision-making, with its mandate clearly defined in legislation.
- 2. Operational independence: the central bank is prohibited from seeking or taking instructions from any private or public body. Third parties are prohibited from approving, suspending, annulling, or deferring central bank decisions. Representatives of third parties should not have the right to vote when they participate in central banks’ decision-making bodies.
- 3. Personal independence: the central bank provides adequate security of tenure for the members of its decision-making bodies. The minimum term of office should be longer than the electoral cycle. More than one authority should be involved in appointment or dismissal (a so-called “double veto” procedure). Clear eligibility requirements are needed, prohibiting government officials and politicians from appointment to a central bank’s decision-making bodies (at least as full voting members). Members of those decision-making bodies should be protected from arbitrary dismissal.

*Source: IMF Working Paper — wp18176 (sections 2 and II excerpt).*

### 4. Financial independence: The central bank can continuously avail itself of sufficient

### 4. Financial independence: The central bank can continuously avail itself of sufficient financial resources to fulfill its mandate (“policy solvency”).

### Overview and objectives
- Financial independence includes continuous availability of sufficient financial resources to fulfill the central bank’s mandate (“policy solvency”).
- Central bank is always sufficiently capitalized; government is required to automatically recapitalize the central bank if its capital falls below its authorized capital level.
- Clear rules exist for determination of central bank budget, and distribution of net profits and losses.
- Central bank accounts are drawn up in line with internationally recognized standards.
- There is a prohibition of, or clear limitation on, providing loans to government, other public entities, and on other forms of fiscal financing.

### Importance of independence for mandate credibility
- Central bank mandate, independence, accountability, transparency, and organization contribute to credibility and trust in the central bank, the market, and the financial sector.
- Central bank independence supported by Wachtel (2017): rise in importance based on four factors: “a) interest in central bank legislation and constitutions; b) reaction to high inflation; c) macro theoretical developments and d) the empirical evidence.”
- Independence is “essential to constrain the ability of a central government to use the printing presses to finance expenditure.”
- Political influence is often short-term oriented and should be avoided in monetary policy decision-making.
- Financial supervision similarly requires operational independence, with levels of independence possibly varying by function (supervision, resolution) and implying potentially more stringent accountability where government financing is involved.

### Legal protection, immunity, and liability — conceptual balance
- Independence can be safeguarded by legal immunity (insulation from liability), which may encourage policy decisions without undue legal threat.
- Accountability is the counterbalance to independence and can be safeguarded by legal liability (allowing central bank actors to be taken to court for actions or omissions).
- Excessive liability for State entities, including central banks, risks paralyzing institutions and inducing overly risk-averse decision-making.
- Appropriate legal protection should be context-specific and possibly function-specific, balancing independence and accountability.
- Forms of legal protection include exclusion of liability, immunity, limitation of liability, and indemnification for legal actions against the central bank.
- Legal protection may be differentiated by function and/or official and must consider overall legal framework, judicial functioning, and central bank position within the State.

### Liability regime taxonomy (frameworks)
- Liability regimes distinguished as:
  - Fault liability vs no-fault liability (Dijkstra 2012).
  - Fault liability further divided into negligent conduct and intentional conduct (“bad faith”).
  - Negligent conduct can be simple negligence or gross negligence.
- International frameworks relevant to liability:
  - Financial supervision and resolution: BCBS Core Principles for Effective Supervision; FSB Key Attributes of Effective Resolution Regimes.
  - Monetary policy: BIS Issues in Central Bank Governance (2009) discusses repercussions for missed targets and preferences for limiting liability in monetary policy.
  - State-Owned Enterprises / Sovereign Wealth Funds: OECD and Santiago Principles emphasize clear accountability and liability arrangements for SOE/SWF governance.

### Function-specific international guidance referenced
- BCBS Principle 2 (Independence, accountability, resourcing, and legal protection for supervisors) and Essential Criteria no. 9: laws provide protection to supervisors and staff against lawsuits for actions/omissions while discharging duties in good faith and protect against costs of defending such actions/omissions.
- IMF (2010) “The Making of Good Supervision” highlights adequate legal protection for staff as an element promoting willingness to take supervisory action.
- FSB Key Attributes: principle 2.6 (and 4.4 sub [ii]) — “resolution authority and its staff should be protected against liability for actions taken and omissions made while discharging their duties in the exercise of resolution powers in good faith, including actions in support of foreign resolution proceedings.”
- BIS (2009) notes about “20 percent of central banks are subject to formal procedures when [inflation, AK] targets are missed,” with examples of formal reporting such as the Bank of England governor’s open letter requirement when the inflation target is missed by more than 100 basis points.

### Findings from IMF Central Bank Legislation Database (CBLD) and IMF TA/surveillance work
- Database scope and methodology:
  - CBLD contains central bank laws and excerpts from constitutions of 143 IMF member countries and monetary unions.
  - Categories used in this analysis include 2.06, 2.09, and 12.04, with full-text searches for “immunity,” “immunities,” “suit,” “indemnity,” “indemnify,” and “liable.”
  - The immunity of the central bank from taxation was considered out of scope for legal protection analysis but included for cross-checks.
- High-level CBLD findings:
  - Out of 143 central banks and monetary unions listed in the CBLD, 31 central banks (22 percent) do not have any financial supervision functions, whereas 112 (78 percent) do.
  - Out of 143 countries and monetary unions, 76 central bank laws (53 percent) contain at least one explicit reference to liability arrangements.
  - In the 76 central bank laws with references to liability:
    - 72 do not specify against whom protection is provided; exceptions: Turkey and Macedonia reference “third parties”; Chile references “interested party”; State Bank of Pakistan references “any person or participant in the payment and settlement systems.”
    - 43 out of 76 have explicit arrangements for partial exclusion of liability.
    - 33 out of 76 have no such immunity arrangements, or the law does not specify immunity arrangements.
  - Out of 76 central bank laws, 67 do not contain specific references to criminal, administrative, or civil liability.
- IMF Monetary and Capital Markets (MCM) TA database findings:
  - Query found 230 links (10 percent) to central bank and/or supervisory liability issues; out of these, 144 (6 percent) relate to unique TA missions.
  - The MCM TA database consists of 2,259 MCM TA reports from around 1980–2017.
  - Most TA missions raising liability issues occurred in the European and Asia Pacific regions and in the pre-GFC period of 2000–08.
  - The scope of liability issues in TA missions most frequently relates to financial supervision, followed by other central bank issues, and financial crisis management and resolution; some cases involve AML/CFT, securities, or SWF liability.
- IMF e-Lib surveillance examples (selected summaries):
  - Country 1 (2016): government announced intention to grant central bank operational autonomy via constitutional amendment providing immunity to directors from lower-court prosecution.
  - Country 2 (2006): authorities stripped deputies and other key public officials of immunity from delinquent actions; legislative decree eliminated constitutional provision on immunity of public servants.
  - Country 3 (2005): new central bank law lacks immunity beyond Governor’s explicit immunity from suit; best practice suggested extending immunity to other officials, including bank supervisory staff.
  - Country 4 (2007–2009 multiple reports): updated banking law provided only “limited immunity to supervisors during the discharge of their duties.”
  - Country 5 (2002): central bank law contains secrecy provisions and staff/former staff are “liable for the damages they cause to the [central bank] in connection with their duties.”
  - Country 6 (Kosovo, 2013): legal framework provided that staff shall not be liable unless intentional wrongful conduct or gross neglect proven and obligated CBK to indemnify legal costs; in practice employees had to cover defense costs until definitively cleared and then claim reimbursement, leading to inadequate practical coverage and delayed reimbursements.
- Summary observation: IMF staff have repeatedly raised legal protection issues in both TA and surveillance work, but clearer, generally accepted guidance for central bank legal protection across all central bank functions is lacking.

### Granular elements of legal protection analyzed (as applied in the paper)
- A – Protected against whom: majority of laws do not specify whom they protect central bank against (72 of 76 with references).
- B – Protected against what: many laws include explicit limited liability references; overall 76 of 143 contain references to liability (53 percent).
- C – Protected in what area: most laws do not specify criminal vs administrative vs civil liability (67 of 76 do not specify).
- D – Who is protected: varies; some laws reference board members, decision-makers, staff, supervisors; specific country examples cited.
- E – Protected against what standard: distinctions between good faith, negligence, gross negligence, intentional wrongful conduct; frameworks differ across jurisdictions.
- F – Protected in what manner: indemnification arrangements exist in some frameworks but may be inadequate in practice (Kosovo example).
- G – Limitations of protection: fines and sanctions may still apply; liability exclusions are often partial rather than absolute.

### Conclusions from the chapter
- Supervisors and resolution authorities are governed by function-specific legal protection principles (BCBS, FSB), but there is no unified set of principles and guidelines for central bank liability covering all central bank functions.
- The BCBS Core Principles and the FSB Key Attributes are clear on need for legal protection for financial supervisors and resolution authorities.
- The BIS indicates a preference for limiting central bank liability for monetary policy, but no single, comprehensive global standard exists for central bank liability across functions.
- Empirical evidence from the CBLD and IMF TA/surveillance shows wide heterogeneity in legal protection arrangements and practical implementation, highlighting the need for clearer, context-specific guidance balancing independence and accountability.

*Source: IMF Working Paper — extracted chapter 4 on financial independence and legal protection (central bank liability, immunity, and indemnification) as contained in the supplied content.*

### references to sanctions and/or fines (Subsection G), which indicates that the respective

### wp18176 - references to sanctions and/or fines (Subsection G), which indicates that the respective

### Scope of Liability
- Central bank laws most often refer to administrative liability (explicit in Subsection G).
- A small number of laws refer explicitly to criminal liability: nine.
- A small number of laws refer explicitly to civil liability: seven.
- Country examples combining liability types:
  - Philippines: criminal, civil, and administrative liability.
  - Ecuador: “administrative, civil and criminal law liability”.
  - Dominican Republic: “notwithstanding criminal and civil liability”.
  - Lithuania: “guilty of criminal act or violation of administrative law”.
  - Guatemala: explicit reference to criminal liability.
  - Kazakhstan: “unless criminally punishable action”.
  - Turkmenistan: generic reference “liability based on laws of Turkmenistan” (assumed to include criminal and civil liability).
  - Pakistan: references to civil liability (“for provisions of the Code of Civil Procedure”).
  - Uruguay: “civilly liable”.
- The central bank law of the Kyrgyz Republic explicitly refers to tax exemption and exempts “regional management” of the Bank of Kyrgyzstan from liability regarding taxes.

### Subjects Protected and Immunity
- Immunity is often allocated to “staff” and “Board members.”
- Members of decision-making bodies (e.g., “the Board,” or “the Council”) and central bank staff are most often cited for immunity protection.
- Specific subject examples:
  - Afghanistan: comptroller-general.
  - Canada and Luxembourg: the auditor.
  - Kyrgyz Republic: “regional management”.
  - Turkmenistan: “structural units”.
  - Malaysia: “any person lawfully acting on behalf of the Bank/officer/employee”.
  - Guatemala: “authorities of the central bank”.
  - Egypt: “workers”.
  - Kazakhstan: “workers and technical workers of the National Bank ... and its departments”.
- Cambodia: Article 71 states “any person who violates Article 15.1... shall be liable,” while Article 15 (sub 1) restricts Article 15.1 to “no officer, employee, or member of the Board of the Central Bank,” creating a narrower limit than Article 71’s language.
- Libya: immunity extends only to “employees”; Article 117 stipulates no criminal action or investigative measure may be taken against employees for performance of their functions unless the Governor gives explicit permission.
- China: direct personal liability for lower levels of central bank staff; law refers to “managers and other persons directly responsible” (Article 48), and “any employee of the People’s Bank of China” (Articles 50 and 51); liability arranged as criminal prosecution “if the case constitutes a crime,” or “administrative sanctions if the case is not so serious as to constitute a crime.”
- Bahamas: directors excluded from liability; Article 12 (sub 9 and 10) specifies “no action, suit, prosecution or other proceedings” can be instituted against a director, and the Bank assumes liability “to the extent that it would be if that member were an employee or agent of the Bank.”
- Korea: Article 25 holds Monetary Policy Committee (MPC) members “individually and jointly liable to the Bank of Korea” for damage caused by the MPC “whether willfully or through negligence”; members who “clearly expressed their dissent at the meeting” are exempted.
- Uruguay: similar dissent-based exemption—“Directors shall be released from liability... if they were present and noted their dissent” (Article 19).

### Standards for Protection
- A governing standard for protection is most often not specified.
- Of central bank laws reviewed, 33 out of 76 do not state a specific benchmark standard for liability protection.
- Where specified, common standards include:
  - Good/bad faith: 20 laws (examples: Bahrain, India, Malta, Mauritius, New Zealand, San Marino, Seychelles).
  - (Gross) negligence: laws of Belgium, Croatia, Honduras, Korea, Montenegro, Serbia, and Tonga.
  - Combined or other standards:
    - Philippines: “violation, negligence, abuse, malfeasance, misfeasance, failure to exercise extraordinary diligence”.
    - Oman: “fraudulent or willful act or failure to act”.
    - Pakistan: “gross negligence or willful misconduct”.
    - Fiji and Namibia: list both good/bad faith and negligence.
- Specific examples of standards tied to judicial outcomes or explicit conditions:
  - Conviction by a court of law cited (Afghanistan, Iraq, Honduras, Guatemala, Philippines, Turkey).
  - Generic court ruling cited (Dominican Republic, Trinidad and Tobago).
  - Central bank can assume explicit liability (Belarus).

### Indemnification Arrangements
- Indemnification arrangements are uncommon.
- Majority: 58 central bank laws have either unspecified arrangements or none at all.
- Minority: 18 central bank laws provide explicit indemnification arrangements.
- Notable country arrangements:
  - Bolivia: Article 60—“justified emergency situation” can allow the president of the central bank to act in prerogatives of the Board and Board members cannot be held liable for those decisions.
  - Dominican Republic: Monetary and Financial Administration bears the cost of defending staff charged, even if they have left service; extends to staff dismissed or sanctioned for refusing actions that contravene the prohibition on financing public and private entities, when those officers challenged these actions before competent authorities.
  - Guatemala: indemnification exists though law does not include explicit liability arrangements; indemnification acts as a backstop.
  - Iraq: standard indemnification language for Board members, employees, or agents, but indemnification does not apply if convicted of a crime arising out of the underlying activities.
  - New Zealand: government provides indemnification; Minister must present to the House of Representatives a report detailing circumstances, amount of payment, person paid, and other relevant matters (Article 179A, Reserve Bank of New Zealand Act, 1989).
  - Papua New Guinea: Governor must report to the Minister with details on circumstances, amount, person paid, and other relevant matters (Article 102 sub 4, Central Banking Act 200 (no. 1)).
  - Philippines:
    - Section 16: specifies instances when “Members of the Monetary Board, officials, examiners, and employees of the Bangko Sentral” may be held liable.
    - Section 15 (e): Monetary Board shall “[I]ndemnify its members, other officials of the Bangko Sentral, including personnel of the departments performing supervision and examination functions against all costs and expenses reasonably incurred by such persons in connection with any civil or criminal action, suit or proceedings... unless he is finally adjudged in such action or proceeding to be liable for negligence or misconduct.”
    - Advance payment of defense costs allowed upon undertaking to repay if not entitled to indemnity.
    - In settlements, indemnification provided only where external counsel advises the person did not commit negligence or misconduct.
    - Noted potential ambiguity: Section 15 uses specific “supervision and examination functions” language while Section 16 references generic “employees”; clarification from Bangko Sentral indicates Section 15 grants the Monetary Board authority to grant indemnity to any Bangko Sentral official for cases arising from performance of official functions.

### Limitations to Protection: Fines and Sanctions
- Liability arrangements are often combined with enforcement mechanisms: fines and other sanctions for members of central bank decision-making bodies, staff, and/or other officials.
- Such mechanisms include disciplinary actions (suspension, termination of contract), financial fines, and imprisonment.
- The majority of central bank laws do not specify whether liability is criminal, administrative, or civil in nature (see Subsection C).
- Prevalence of explicit sanction arrangements:
  - Around 19 percent (27 out of 143 entries in the CBLD) of central bank laws have arrangements for applying specific fines or other sanctions for violation of provisions in the central bank law.
  - The remaining 81 percent may lack specific, quantifiable sanctions in the central bank law but could reference other laws containing specific sanctions (example: Luxembourg references penalties listed in the Luxembourg Criminal Code).
- Typical offenses subject to fines/sanctions:
  - Breaches of confidentiality and secrecy (sometimes termed “fidelity,” e.g., Liberia).
  - Conflicts of interest.
  - General contravention of the central bank law.
  - Corruption and fraud (examples: Kazakhstan, Trinidad and Tobago).
  - Specific actions: withholding information from an external auditor (Zimbabwe); “causing injury” (Thailand).
- Example of severe sanctions language:
  - Maldives: possible sanctions for violating conflict-of-interest rules include “imprisonment or banishment or house arrest.”

*Source: IMF CBLD, as presented in wp18176 - references to sanctions and/or fines (Subsection G).*

### references to liability arrangements (76), given that there are a number of countries that do not contain such

### wp18176 - references to liability arrangements (76), given that there are a number of countries that do not contain such

### Quantified sanctions in central bank laws
- The following 27 countries have central bank laws that contain one or more quantified sanctions: Bahamas, Bahrain, Belize, Botswana, Cambodia, Canada, Egypt, Fiji, Gambia, Ghana, Guyana, Kazakhstan, Kenya, Liberia, Malawi, Malaysia, Maldives, Mauritius, Namibia, Seychelles, Thailand, Tonga, Trinidad and Tobago, Uganda, UK, Zambia, and Zimbabwe.
- Country with the most extensive list of punishable issues: has nine separately listed penalty provisions (text reference: "28 has the most extensive list of punishable issues, with nine separately listed penalty provisions.").

### Fines: magnitudes and examples
- Reported fines for violating central bank law provisions range from 7 USD to 700,000 USD.
- Malawi: lowest fine, with a maximum of 5,000 K (approximately 6.89 USD) for violation of its secrecy provision.
- Malaysia: highest fine, with a maximum of 3 million Ringgit (approximately 708,466 USD) for violation of its secrecy provision.
- Other notable fines:
  - Canada: 78,330 USD, for anything contravening the Central Bank Act, for holding office as Governor, Deputy Governor, or Director without being eligible, and for verifying false statements.
  - Bahamas: 50,000 USD, for violation of the confidentiality provision.
  - Thailand: 60,313 USD, for violation of several penalty provisions, such as those relating to personal enrichment, and damaging the central bank.
- Average (maximum) fine across central bank laws: 27,963 USD.
- Figure reference: "Figure 14. Maximum Average Fines in Central Bank Laws" (Source: IMF CBLD).
- Exchange-rate/data note: based on USD exchange rate of November 3, 2017, and specific national Fees and Fines Acts for penalty/unit conversions where central bank law refers to penalty/fine units (Zambia, Ghana).

### Imprisonment: ranges and averages
- Imprisonment possibilities range from three months to 20 years.
- Zimbabwe: lowest imprisonment term of a maximum of three months for violating the provision on withholding information from the external auditor; also lists a maximum two years’ sentence for violation of the secrecy provisions.
- Canada and Guyana: lowest average maximum imprisonment terms of six months (Canada for holding office as a Board member when ineligible, and for anything that contravenes the Central Bank Act; Guyana for violating confidentiality provisions).
- Thailand: imprisonment terms ranging up to 20 years, or even a life sentence, for specified offenses.
- Average maximum term for imprisonment of all 24 countries: three years.
- Figure reference: "Figure 15. Maximum Average Imprisonment Terms in Central Bank Laws" (Source: IMF CBLD).

### Combination of sanctions (fines and imprisonment)
- Most common formulation: combination of financial fines with the possibility of imprisonment.
- Frequency by formulation:
  - "and/or" option (fine and/or imprisonment): 18 countries.
  - Combination requiring both fine and imprisonment (no option): five countries.
  - "Or" only (judicial choice between fine or imprisonment): Seychelles and Guyana.
- Notable outliers:
  - Fiji: central bank law prescribes a fine (for violation of secrecy provisions) and does not include the option of imprisonment.
  - Bahrain: includes a fine provision for violating confidentiality, and a general reference to imprisonment without specifying a term of incarceration.
- Summary statement: Given the wide variety of legal regimes and domestic legislation, the fines and sanctions arrangements present in a limited number of central bank laws provide an interesting overview of different country practices.

### V. Selected country examples — overview and key points
- Purpose: Illustrative overview of central banks’ experiences with measures of legal protection; countries chosen to reflect geographical diversity; not comprehensive.

A. Colombia
- Banco de la República governed by general legal framework; Central Bank Act (Act 31 of 1992) contains no references to liability or immunity.
- Constitutional and statutory provisions governing State/public entity liability:
  - Constitution: Article 90 — State will respond materially for unlawful damages caused by actions or omissions of public authorities.
  - Act 678 of 2001; Act 1437 of 2011; Act 734 of 2002; Act 610 of 2000 (procedures for fiscal responsibility).
- Anti-corruption statutes referenced: Act 1474 of 2011; Act 1778 of 2016.
- Exception in Central Bank Act: Article 14 provides that international reserves cannot be seized.
- Litigation experience: sued on measures related to UPAC methodology, records of foreign investment, sanctions due to monetary and exchange rate intervention operations, labor issues, and contracts.

B. Cyprus
- Central Bank of Cyprus (CBC) subject to statutory provisions limiting liability for supervisory tasks; limitations tied to acts/omissions committed in bad faith or due to gross negligence.
- Domestic law protections:
  - Cypriot Business of Credit Institutions Law, Section 32 — CBC and its directors/officers not liable for actions done in discharge of functions unless not in good faith or due to gross negligence.
- Resolution-function liability limits:
  - Section 111 of Law 22(I)/2016 (transposing BRRD) limits liability of Minister of Finance, CBC Governor, CBC Board members, and CBC staff to acts/omissions in bad faith or gross negligence; does not apply to the CBC as resolution authority in totality.
  - Section 86: courts shall accept complex economic assessments of the resolution authority as a basis for their own assessment (transposing Article 85.3 of BRRD).
- Administrative recourse under Article 146 of the Cyprus Constitution may lead to annulment/ratification and possible follow-on civil action for "fair and just" indemnification under Article 146(6).
- Litigation exposure: CBC is defendant in hundreds of claims filed by depositors and shareholders of two major banks resolved in March 2013; no decisions yet. Uncertainty remains whether statutory liability limitations will shield CBC in tort or breach-of-statutory-duty actions.

C. India
- Reserve Bank of India (RBI) responsibilities: price stability (sole), implicitly financial stability and financial integrity; implicit roles in economic development and financial inclusion reflected in the Reserve Bank of India Act, 1934 preamble and Section 54.
- India lacks specific legislation on liability exposure of State or State entities; State/public entities generally as liable as private persons except for sovereign functions or specific statutory provisions.
- RBI statutory protections:
  - Section 43A, Reserve Bank of India Act, 1934 — protection for actions taken in good faith by the Bank or any of its officers under specified sections.
  - Section 58A, Reserve Bank of India Act, 1934 — protection from "prosecution" to the Central Government or the Reserve Bank "or any other person" for anything done or intended in good faith covered by the Act.
  - Similar protections in other statutes administered by RBI: Banking Regulation Act, 1949 (Sections 50, 54); Payment and Settlement Systems Act, 2007 (Section 36); Foreign Exchange Management Act, 1999 (Section 44); Credit Information Companies (Regulation) Act, 2005 (Section 30).
- Litigation history: RBI frequently a party to litigation, covering policy actions under statutory powers and staff grievances.
- Specific court cases cited:
  - Pramod Malhotra & Ors versus UOI & Ors [2004 (3) SCC 415] — Supreme Court held RBI not liable for defaults of a transferor bank in an amalgamation scheme absent bad faith.
  - J M D'souza versus RBI [AIR 1946 Bom 510] — Bombay High Court dismissed mandate to force RBI to pay bank note claim in light of High Denomination Bank Notes (Demonetization) Ordinance, 1946.
  - Bimladevi versus UOI & Anr [1985 58 Comp Cas 361 (Delhi)] — court held RBI was under no obligation to exchange demonetized notes after statutory period expired.

D. Israel
- Bank of Israel (BOI) responsibilities: price stability, financial stability, consumer protection, financial integrity, economic development.
- Liability framework:
  - Torts Ordinance: Section 6 — defense where wrongful act (except negligence) was performed according to law or lawful authorization.
  - Torts Ordinance: Section 7A — immunity for State employees and employees of public authorities for actions performed in fulfillment of government office, except intentional harm.
  - Civil Torts Law (State Liability) 5712-1952 — State liable in torts with exceptions for acts within lawful authorization (except negligence).
- BOI Law: contains no specific BOI liability, immunity, or indemnification provisions; indemnifications exist in specific agreements entered into by BOI but not set by law.
- Litigation experience: majority of BOI cases involve administrative law challenges, bank consumer claims (BOI as formal respondent), and employment-related matters.

E. Thailand
- Bank of Thailand (BOT) responsibilities: price stability, general financial stability and stability of financial institutions, consumer protection, financial inclusion.
- General law applicable: Act on Tortious Liability of Officials, B.E. 2539 (1996) (the Tortious Liability Act).
  - Section 5: state agency liable to injured person for consequences of tortious act committed by its official in performance of duty; injured person may sue the state agency but not the official directly.
  - Section 8: indemnification of state agency (BOT) where BOT pays compensatory damages; BOT has right to claim payment from the official who committed the tort if committed on purpose or with gross negligence; claim extent must account for gravity, fairness, and operational/system errors; no legal obligation to pay full amount.
- Criminal liability: specific criminal liability arrangements applicable to BOT officials; no criminal liability for the BOT as an entity.
- Bank of Thailand Act B.E. 2485 (1942) as amended: contains provisions imposing criminal liability on BOT officials (text excerpt ends before listing specific provisions).

*Source: wp18176 - references to liability arrangements (76), given that there are a number of countries that do not contain such; IMF CBLD material as presented in the provided content.*

### Section 66: The Governor, the Boards, the officer or employee, having the duty to

### Section 66: The Governor, the Boards, the officer or employee, having the duty to 

### Criminal liability provisions (Sections 66–73)
- Section 66:
  - Offense: Governor, the Boards, officer or employee having the duty to purchase, manufacture, manage, or keep any property dishonestly, misappropriates such property for himself or herself or other persons, or dishonestly allows other persons to take such property.
  - Penalty: liable to imprisonment for a term of five to 20 years or a life imprisonment or a fine of 500,000 Baht to 2 million Baht or both.
- Section 67:
  - Offense: Governor, the Boards, officer or employee wrongfully exercising his or her functions to coerce or induce any person to deliver or to procure a property or any other benefit for himself or herself or other persons.
  - Penalty: liable to imprisonment for a term of five to 20 years or life imprisonment or a fine of 500,000 Baht to 2 million Baht or both.
- Section 68:
  - Offense: Governor, the Boards, officer or employee wrongfully demanding, accepting or agreeing to accept for himself or herself or other persons a property or any other benefit for exercising or not exercising any of his or her functions whether such exercise or non-exercise of functions is wrongful or not.
  - Penalty: liable to imprisonment for a term of five to 20 years or life imprisonment or a fine of 500,000 Baht to 2 million Baht or both.
- Section 69:
  - Offense: Governor, the Boards, officer or employee performing or omitting any act in one’s own function in consideration of the property or any other benefit demanded, accepted, or agreed to accept by oneself before being appointed as official in that post.
  - Penalty: liable to imprisonment for a term of five to 20 years or life imprisonment or a fine of 500,000 Baht to 2 million or both.
- Section 70:
  - Offense: Governor, the Boards, officer or employee having the duty in the purchase, execution, management, or keep of anything dishonestly exercises any of his or her functions damaging the BOT.
  - Penalty: liable to imprisonment for a term of five to 20 years or life imprisonment or a fine of 500,000 Baht to 2 million or both.
- Section 71:
  - Offense: Governor, the Boards, officer or employee having the duty of managing or looking after any activity, takes the interest for the benefit of himself or herself or other persons concerning such activity, except for the act assigned by the BOT or under the BOT’s regulations.
  - Penalty: liable to imprisonment for a term of one to10 years or a fine of 100,000 Baht or 1 million or both.
- Section 72:
  - Offense: Governor, the Boards, officer or employee having the duty to defray things, defrays such things in excess of what should be defrayed for the benefit of himself or herself or other person.
  - Penalty: liable to imprisonment for a term of one to 10 years or a fine of 100,000 Baht or 1 million or both.
- Section 73:
  - Offense: Governor, the Boards, officer or employee wrongfully exercising or not exercising any of his or her functions to the injury of any person, or dishonestly exercising or omitting to exercise any of his or her functions.
  - Penalty: liable to imprisonment for a term of one to 10 years or a fine of not exceeding 100,000 to 1 million Baht or both.

### Administrative litigation example
- The BOT has been sued in the administrative counts for negligence of its official duties.
- Nature of cases: predominantly relate to the BOT’s duties of regulating financial institutions; filed by several consumers dissatisfied with services of financial institutions under BOT supervision.
- Status: These cases are still ongoing in the courts.

### Key statutory penalty magnitudes (exact figures)
- Imprisonment terms cited: five to 20 years; life imprisonment; one to10 years; one to 10 years; one to 10 years.
- Monetary fines cited: 500,000 Baht to 2 million Baht; 100,000 Baht or 1 million; 100,000 Baht or 1 million; not exceeding 100,000 to 1 million Baht.

### Observations in context of central bank legal protection (from Conclusion)
- General points:
  - Most central bank laws do not specify whom they provide legal protection against.
  - The majority of central bank laws contain explicit references to liability, often excluding or limiting liability, in particular for decision-makers and staff, often without providing explicit details on indemnification arrangements.
  - In numerous cases, IMF surveillance and MCM technical assistance stresses the need for legal protection of central banks and financial supervisors.
- Role of legal protection:
  - Legal protection is crucial for safeguarding the independence of central banks and financial supervisors.
  - Protection of decision-makers and staff supports making difficult policy decisions without fear of direct repercussions.
- Need for accountability:
  - Accountability is required as a counterweight to legal protection; ex ante protection should be balanced by ex post accountability arrangements.
  - Central bank laws can include transparency provisions, including reporting requirements to the Minister and/or to Parliament.
- Recommendations on tailoring protection:
  - Legal protection should be appropriate and possibly function-specific.
  - Tailoring should consider the overall legal framework, legal tradition, functioning of the judicial system, and the position of the central bank within the country.
  - Function-specific application is already the case for supervisory and regulatory entities, based on relevant international principles.
- IMF role:
  - The IMF has stimulated discussion on legal protection of central banks and financial supervisors via surveillance and technical assistance.
  - Publication of recommendations and discussion with authorities have contributed to greater awareness of central bank governance issues where direct implementation was less successful.
  - Further analysis, taking legal traditions into account, and use of IMF databases on types of central bank liability (criminal, administrative, and/or civil) would be helpful.
- Practical reality:
  - De jure legal protection arrangements in laws do not preclude de facto court cases initiated by financial institutions, consumers, depositors, and current and former central bank employees.
  - As central banks and supervisors operate in difficult, complex market situations, their actions will remain under continuous scrutiny and challenge.
  - Proper legal protection, as a tool for central bank independence, together with accountability arrangements, remains crucial.

*Source: wp18176 - Section 66: The Governor, the Boards, the officer or employee, having the duty to (PDF).*

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_Source: https://www.imf.org/-/media/files/publications/wp/2018/wp18176.pdf_