Central banks are under increasing scrutiny over their performance, their costs and the extent to which they employ modern management practices. Yet while performance management techniques are widespread in the commercial sector, it is difficult to apply these directly to central banks. This article begins by setting out what is involved in performance management and discusses some of the problems that occur in applying them to central banking. In a second section, some examples of best-practice activities in performance management are considered. It is hoped that this will open a debate about performance management - a debate to which all central banks are invited to contribute1.
Performance management in modern organisations is concerned with outcomes (results), outputs (products) and inputs (activities) in that order. It should be concerned with improving the efficiency and effectiveness of the conversion processes between each level of the orgnaisation, and it needs to take account of the degree to which the organisation is conditioned by, or able to control, its environment in seeking to achieve its objectives.
What then are the problems with applying performance measurement to central banks? This article groups them into three.

First, central banks have to satisfy multiple stakeholders, outcomes and outputs; second, perverse results can arise from pursuing some measures at the expense of others; and third, there are few comparators to turn to for guidance.
From a performance measurement perspective then, modern central banks should be assessed against their agreed purposes and criteria for their successful management. Generally speaking, these center on contributing to sustainable socio-economic growth (an ultimate outcome), by encouraging monetary and financial stability (general, supporting outputs), through setting the right interest rates and