9/15/2006

Poland rebuked over bid to curb central bank's powers

The Polish government was on Thursday night handed a stinging rebuke for trying to curb the powers of the country's central bank, with the European Commission warning that it would keep a "close eye" on Warsaw's stance.

Charlie McCreevy, the European Union internal market commissioner, said in a speech to Polish businessmen: "Supervisors must be independent from political interference. I must therefore underline that I am deeply concerned by what is currently happening in Poland.


Mr McCreevy, who enjoys sweeping powers to police the internal market and launch infringement cases against national governments, said: "There can be no trust, no efficient co-operation, no confidence from the market and in the market if financial supervisors have to follow orders from political masters."

He added: "I will, together with the European Central Bank and my colleague Joaquín Almunia [the EU monetary affairs commissioner] keep a close eye on this."

His comments were intended as a warning to the Polish government in its fight to limit the influence of the National Bank of Poland and its embattled president, Leszek Balcerowicz. Mr Balcerowicz faces a two-pronged assault from the conservative Law and Justice party government, which is busy setting up a unified financial services regulator that some fear will be more open to political interference than the central bank is.

He is also under fire from an investigation committee set up by Poland's parliament to probe the last 17 years of Polish banking and regulation. Mr Balcerowicz says the panel is out to destroy him, and has refused to appear before the committee until the country's constitutional court rules on its legality next week.

He fell foul of the government when he refused its demand earlier this year to block the merger of two Polish banks owned by UniCredit, the Italian financial group.

Earlier this summer, parliament rushed through a law creating a new unified financial services regulator out of separate regulators for the banking, insurance and securities industries. The government argues that a single regulator will be cheaper and follows a trend in many other countries. But the Polish plan has aroused concern that the new body will be much more open to political interference than current regulators.

Source:By Tobias Buck and Jan Cienski , msnbc.msn.com,



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