Controversial finansial market regulator takes effect in Poland

A controversial new commission designed to supervise the rapidly growing Polish financial sector took effect Tuesday, despite the objections of the opposition and concerns of the European Commission, Polish media reported. The brain-child of Poland's governing right-wing Law and Justice (PiS) party, the new Commission for Financial Supervision (KNF) replaces several independent institutions which have regulated Poland's rapidly growing private banking, stock market and insurance sectors since the advent of capitalism in 1989.

In a move which has been condemned by international observers, the KNF replaces the Polish Securities and Exchange Commission (KPWiG) and the Insurance and Pensions Supervisory Commission (KNUiFE) with immediate effect Tuesday.

On January 1, 2008 it is also due to take over supervision of the independent Banking Supervisory Committee (KNB) headed by Poland's internationally respected central bank chief Leszek Balcerowicz.

Seven government-appointed officials will sit on the new KNF, including presidential and finance ministry representatives. The president of the National Bank of Poland (NBP) will also be a member.

Press speculation has focused on several PiS-allied politicians as candidates for KNF chairman. They include former PiS deputy finance minister Cezary Mech, Finance Ministry insider, economist Iwona Duda and Poland's current Finance Minister Stanislaw Kluza.

Critics of the new institution noted that it would be subject to political cronyism and lack the healthy independence of the organisations it replaced.

"It's all about giving their friends a job," MP Zbigniew Chlebowski of the opposition liberal Civic Platform told Poland's Dziennik daily.

Last week NBP chief Leszek Balcerowicz also roundly blasted the new KNF as undermining the unbiased and independent supervision of Poland's financial sector.

Poland's Lewiatan Confederation of Private Employers echoes Balcerowicz's concern.

"The head of the KNF will be appointed directly by the prime minister, there will be no competition, which until now has been a filter for incompetent candidates," Lewiatan's Krzysztof Kajda told Dziennik.

Objectors also note the centralisation of power over Poland's banking, capital market and insurance sectors could prove very damaging.

The governing PiS and other supporters, however, argue similar centralised organisations in Britain and the Netherlands are well- equipped to monitor the ever-more complex fusions of financial institutions in the era of globalization.
Source: rawstory.com,